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Russian (RU) Adam Spatacco, The Motley Fool
Sun, May 11, 2025, 9:21 AM 6 min read
In This Article:
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In their Q1 earnings reports, Amazon, Microsoft, Alphabet, and Meta Platforms all confirmed their plans for massive AI infrastructure spending.
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Advanced Micro Devices also shared encouraging details regarding the outlook for its next-generation GPUs.
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Rising AI infrastructure spending and a robust outlook for GPUs bodes well for Nvidia.
Between 2023 and 2024, the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) generated total returns of 58% and 87%, respectively. These gains were fueled in large part by the artificial intelligence (AI) revolution.
Unfortunately for AI investors, 2025 has been a different story. In April, there was significant panic-selling across growth stocks in particular. Investors are undoubtedly concerned over the various potential outcomes of President Donald Trump's tariff policies.
But could these emotions be overblown? I think they could be.
Let's explore some recent updates from the AI industry's biggest cast members and why semiconductor king Nvidia (NASDAQ: NVDA) could see its shares surge after it reports its first-quarter results on May 28.
Over the last couple of weeks, numerous companies have reported their Q1 financial results. When it comes to AI, investors ought to pay close attention to Microsoft, Amazon, Alphabet, Meta Platforms, and Advanced Micro Devices, all of which are devoting considerable resources to their AI-related pursuits. The trends in their capital expenditures (capex) and revenues can shed some light on broader demand in the AI space and where it might be headed.
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Cloud hyperscalers: While Amazon, Microsoft, and Alphabet have all built incredibly diversified businesses, cloud computing infrastructure is top of mind when it comes to how AI is fueling growth for these companies. During the first quarter, Microsoft's Azure cloud business generated revenue growth of 35% year over year on a constant-currency basis. Alphabet and Amazon grew their cloud businesses by 28% and 17%, respectively. These growth figures were strong enough to support the companies' previously published infrastructure budgets, and their management teams reiterated their capex forecasts. These three "Magnificent Seven" members are on track to spend a combined $260 billion on AI capex this year.
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Meta Platforms: Over the last couple of years, Meta has spent significant sums on AI capex in support of a number of ambitious projects, from home-grown chips to AI-powered wearable hardware (i.e., its AI glasses and virtual reality gaming headsets). In 2023, Meta spent $28.1 billion on capex. In 2024, the company boosted that by 40% to $39.2 billion. And in its Q4 2024 earnings presentation in late January, Meta's management guided for 2025 capex to be in the range of $60 billion to $65 billion -- another boost of up to 66%. Well, guess what? During the Q1 call a couple of weeks ago, Meta raised its capex guidance range to $64 billion to $72 billion.
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AMD: Over the past month, semiconductor stocks have proven particularly sensitive to the tariff situation. One of the main reasons for this is changing regulatory protocols related to Chinese exports, as China remains a major market for chip sellers. While the situation remains fluid, I'd argue that trade war concerns have permeated a bit too broadly. During AMD's Q1 earnings call on May 6, CEO Lisa Su said:
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