Big tech sees AI investments begin to pay off

Tech companies are finally generating real revenue from their AI investments, but they're pouring that money — and more — back into data centers in a bet that the AI boom is just getting started.Why it matters: Investors will want to see those massive investments not only generate revenue, but profits too.While investors applauded strong returns from Google, Microsoft and Meta, there are signs that their patience is not infinite.Light guidance from Amazon sent shares plunging Thursday, and even if not directly tied to AI spending, it reflects the high hopes the market is pinning on the AI leaders.Driving the news: Microsoft and Google credited the AI boom with helping them deliver better-than-expected results for the most recent quarter.Investors weren't wowed by Amazon's outlook, but the Web Services business generated nearly $31 billion in quarterly revenue, about what analysts were expecting.Shares of Meta surged after CEO Mark Zuckerberg unveiled his personal superintelligence strategy, the thesis underlying the massive investments that he's making not only in computing horsepower, but also in talent.Apple delivered a strong quarter, though that was thanks to iPhone sales. The company has struggled to deliver on Apple Intelligence, with some features promised last year having yet to ship and only modest advances included in the latest versions of the software that powers its devices.OpenAI — still a private company and not subject to quarterly disclosures — is also seeing continued, rapid growth. The Information reported this week that the ChatGPT maker now generates about $1 billion per month in revenue, up from $500 million per month at the start of 2025.Between the lines: The tech giants are all spending huge on data centers and computing horsepower, helping Nvidia become the first company with a $4 trillion market capitalization, and Microsoft the second.OpenAI is expanding its Stargate data center network, announcing plans on Thursday for the first European project: Stargate Norway.Meta, which has been making headlines for its eye-popping salary offers to top AI engineers, is also spending big on computing capacity.Microsoft expects to spend $100 billion in capital expenses next year, including a record $30 billion this quarter, mostly for AI.All told, big tech companies invested roughly $245 billion in AI infrastructure last year and are seen upping that to $320 billion this year, per numbers compiled by the Financial Times.What they're saying: "Meta's blowout quarter was the best example to date of AI having a tangible impact on revenue and earnings growth at scale," longtime tech analyst Gene Munster wrote this week. "The question of whether AI has an ROI can be put to rest."Bottom line: AI is fueling revenue, but spending is growing even faster.

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