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Microsoft CEO Satya Nadella speaks during the Microsoft Build conference at Seattle Convention Center Summit Building in Seattle, on May 21, 2024.
Microsoft, Meta, and IBM all highlighted healthy growth in their AI businesses in the last three months of 2024.
Microsoft and Meta, which cumulatively expect to invest nearly $150 billion in infrastructure in their respective 2025 fiscal years, stood by their aggressive spending plans.
Executives expressed confidence that Chinese start-up DeepSeek’s incredibly cost-efficient AI model, which spooked investors earlier this week, was ultimately a good thing for their businesses.
Artificial intelligence was the focus on Wednesday when tech giants Microsoft (MSFT) and Meta (META) kicked off the first round of Big Tech earnings of 2025.
Analysts peppered executives with questions about their AI investments, how much AI is contributing to revenue, and their thoughts on Chinese start-up DeepSeek, which shook up Wall Street earlier this week with its super-efficient AI model.
Executives were eager to show investors that artificial intelligence is contributing to their bottom lines.
Meta CFO Susan Li said Meta AI reached 700 million monthly active users in the fourth quarter while the company’s AI-powered Advantage+ marketing service grew 70%. Meta’s quarterly revenue and earnings both surpassed analysts’ expectations.
Microsoft’s fiscal second-quarter cloud revenue fell slightly short of expectations, but CEO Satya Nadella noted the company’s AI revenue run rate hit $13 billion in the quarter, well above the $10 billion mark he forecast in October.
IBM (IBM) CEO Arvind Krishna said the company booked nearly $2 billion of AI business in the final quarter of 2024; that accounts for about 40% of the $5 billion booked since inception.
Executives from Microsoft and Meta stood by their plans to spend tens of billions of dollars this year on AI infrastructure.
“We expect to continue investing against strong demand signals,” Microsoft CFO Amy Hood said of its capital expenditures plan on the company’s earnings call. “However, the growth rate will be lower than FY2025.”
Microsoft forecast spending $80 billion on infrastructure in its 2025 fiscal year. So far, two quarters in, the company has spent $30.7 billion, a 56% increase from a year ago.
Meta CEO Mark Zuckerberg also defended his company’s massive AI investments, which could total $65 billion this year. “I continue to think that investing very heavily in CapEx and infra is going to be a strategic advantage over time,” he told analysts on Wednesday evening.
Big tech’s AI spending was already a source of anxiety on Wall Street, where for half a year questions have swirled about whether demand will match the scale of infrastructure investments. Those doubts were amplified this week when markets took notice of DeepSeek, whose open-source AI model reportedly performs as well as leading U.S. models and runs at a fraction of the cost.
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