In early 2025, Google CEO Sundar Pichai announced that the company plans to invest $75 billion in developing data center capacity to support artificial intelligence. This decision was announced amid new trade tariffs imposed by the administration of US President Donald Trump, which created uncertainty in the cloud computing infrastructure market. Although investors had expected no more than $58 billion in spending, Google intends to allocate $75 billion over the year. A company representative noted that even though duties may increase the cost of equipment import, investments are still needed given the high demand.
Pichai stressed that the allocated funds would be used to purchase chips and build the servers necessary to maintain key Alphabet services and develop AI technologies. He noted that the opportunities associated with AI are more significant than ever, and the company cannot afford to slow down the pace of expansion, which goes far beyond day-to-day casual use.
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At the same time, the final parameters of US trade policy have yet to be finalized. While the implementation of tariffs has been postponed for 90 days for some countries, the tariffs have been doubled for China. In response, China appears to be preparing retaliatory measures, which could further complicate logistics and pricing.
Following Google's announcement, Amazon shared its own plans. In a letter to shareholders, CEO Andy Jesse confirmed the company's intention to invest $100 billion in data centers in 2025, noting that AI requires unprecedented capital investment. Although Amazon started making profits years after its initial investment, the demand for AI is unlike anything seen before.
After a prolonged rally, Amazon stock is recovering from a correction phase. However, such bold intentions may positively impact its share price, benefiting the company, its customers, and shareholders.
Over time, AI and accelerators — particularly, Amazon's in-house designed Tranium2 — are expected to become more accessible. This will be achieved by increasing the efficiency of semiconductors in terms of architecture and caching, as well as ongoing improvements in AI models.
However, not all tech giants are following the same strategy. Microsoft has drawn attention by announcing a reduction in data center projects, contrasting with aggressive investments by Google and Amazon. Subsequently, the company hastened to emphasize that the overall strategy is not changing and that it intends to allocate $80 billion for capital expenditures. Microsoft says that constructing a data center is a long-term capital-intensive program planned for years ahead to ensure sufficient infrastructure. Despite the cautious approach, Microsoft stock is relatively stable, reflecting investor confidence in its long-term vision and diversified business model.
This shift may reflect a re-evaluation of priorities or efforts to optimize cloud infrastructure, but the exact reasons have not been disclosed. In recent years, demand for the Microsoft's cloud and AI services has grown beyond expectations, making the company undertake the most extensive infrastructure scaling in its history.
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The decisions of the US administration may significantly impact the cost and pace of infrastructure development in the coming years, intensifying competition in the cloud and AI technology sectors.
Despite trade wars and regulatory risks, the largest market players continue to expand their AI capacity. While Google and Amazon are betting on large-scale investments, Microsoft seems to be looking for a more flexible approach.
