Bank of America expects hyperscaler capital expenditures to rise 34% year-over-year to $257 billion in 2025, despite the recent disruption caused by DeepSeek's R1 model in the AI space.
BofA analysts, led by Justin Post, said in a Monday note that cloud companies remain committed to expanding data center investments, driven by strong AI demand and existing capacity constraints. They also noted that falling costs could unlock additional spending.
Amazon (NASDAQ:AMZN) CEO Andy Jassy called AI demand insatiable, citing chip supply shortages as a bottleneck for data center expansion. He added that 2025 may not be the peak year for generative AI (GenAI) investments, as some companies will continue to scale AI initiatives while others may pull back.
Meanwhile, Meta (NASDAQ:META) is reportedly in talks with Apollo Global for a $35 billion funding round to expand U.S. data center infrastructure. CEO Mark Zuckerberg is pushing the company deeper into AI, with a $60B$65B investment plan.
Microsoft (NASDAQ:MSFT), Amazon, and Alphabet (NASDAQ:GOOG) are also scaling up AI spending, committing $80B, $100B, and $75B, respectively, in 2025.
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