From Silicon Valley to Seattle, the third-quarter performance data of major tech companies so far points almost in the same direction— artificial intelligence. (AI) investment boom.
It's clear that the development of artificial intelligence is growing at a rate no one could have imagined a few years ago. In fact, some analysts believe we are witnessing one of the biggest investment booms since World War II, with tech giants racing to expand their physical AI infrastructure, including data centers. Chips and power systems. This, in turn, triggered a staggering surge in spending across the industry.
Chris Versace, a veteran fund manager and head of portfolios at TheStreet, believes that this key "tailwind" could quietly drive the next wave of AI resurgence.
He explained that the latest earnings reports from major tech companies have brought to light a powerful long-term theme that has been hidden from view for some time—the continued rise in capital expenditures.
He believes that Google's parent company Alphabet, Meta Platforms, and Microsoft Recent quarterly earnings reports show that demand for artificial intelligence is exceeding production capacity, forcing large tech companies to invest heavily to keep pace with AI development.
At Alphabet, Google Cloud's sales grew by an impressive 33.5% year-over-year to $15.2 billion, and the company's cloud computing... The backlog grew 46% in the third quarter, reaching $155 billion. Google expects capital expenditures in 2025 to increase significantly from the previous $85 billion to $91 billion to $93 billion, and hinted at another "significant increase" in 2026.
Due to stronger-than-expected demand, Meta Platforms has increased its capital expenditure range to $70 billion to $72 billion this year. The company's spending will continue to grow in 2026, with management adding that it will be "significantly larger" than in 2025.
Then there's Microsoft . Despite capacity constraints, Azure AI performed admirably, easily surpassing internal targets. Furthermore, its remaining commercial obligations surged to $400 billion, a 50% year-over-year increase (this doesn't include the $250 billion deal with OpenAI).
Microsoft 's next move is to increase its AI capabilities by 80% this year, while doubling its already impressive data center size within two years.
For Versace, these numbers all point in the same direction.
“Every report is saying the same thing in different languages; artificial intelligence and cloud computing are accelerating, not reaching their peak,” he said.
Here are the key points Versace made regarding AI capital expenditures:
Capital spending is a new catalyst for artificial intelligence: Versace believes that the surge in infrastructure investment by large tech companies could drive the next wave of AI growth.
Spending is soaring across the board: Alphabet, Meta and Microsoft are all increasing capital expenditures for 2025-2026, while combined spending on artificial intelligence and cloud computing could reach $420 billion by 2026.
Chipmakers will benefit: Versace points out that Nvidia... (Nvidia), Marvell, and Qualcomm Qualcomm will remain a major player in expanding data for large technology companies. The main beneficiaries of the arms race in centralization and artificial intelligence capabilities.
Finally, Versace emphasized that the biggest leaders in the tech industry are sending a clear message: the AI boom is not just a phase, but a full-blown infrastructure race. They are going all in, despite pressures from soaring costs and other factors.
(Article source: CLS)
