Tech companies are generating significant revenue from their investments in artificial intelligence (AI), but many are pouring a substantial portion of those profits back into data centers, betting that the AI market is still growing rapidly.
Microsoft and Google reported better-than-expected results for their latest quarter, with both companies crediting AI as a key factor. Amazon’s disappointing outlook, despite strong revenue from its Web Services business, highlights investors’ patience wearing thin.
Other tech giants are also investing heavily in data centers and computing power, with Nvidia becoming the first company to reach a $4 trillion market capitalization. OpenAI is expanding its Stargate data center network and plans to announce its first European project soon.
Despite the success of Meta’s recent quarter, driven by its personal superintelligence strategy, investors are seeking profits rather than just revenue growth. The Magnificent 7, which includes these tech giants, are underperforming the S&P 500 year-to-date, raising questions about how investors should trade the AI rally.
The rapid growth of OpenAI and other AI builders is driven by increased adoption and new approaches to model training, which demand more computing power and data centers. Mark Zuckerberg’s talent acquisition efforts, including multibillion-dollar offers, have further complicated the government’s ability to develop its own technology bench.
Source: https://www.axios.com/2025/08/01/ai-earnings-google-microsoft-meta-stocks