Whereas Microsoft Recently supported some leases with its data center buildout, both Heroic (Amzn 2.01%, And Alphabet (Googl 2.79%, (Goog 2.56%, Further look ready for full steam.
Microsoft is still planning to spend about $ 80 billion on Infrastructure Capital Exanders (CAPEX) for Artificial Intelligence (AI) for this financial year, but its financial year ends in June, only a few months from now. However, it is stopping some early stage projects, apparently because its requirements and its AI partner OpeniI they are moving in different directions. For its share, Openai is trying to build its ability; It is part of the project Stargate, which is planning to spend $ 500 billion at AI data centers over the next few years.
However, both Amazon and Alphabet have planned to spend big in 2025. The alphabet recently reiterated that it would spend $ 75 billion in the data center Capex this year, while alphabet plans to spend around $ 100 billion. The possible impact of the tariff is not changing their plans.
In a letter to the shareholders this month, Amazon CEO Andy Jassi called AI “once in a lifetime, whatever we know, once a reinforcement”, and said that it is “moving faster than any technology.”
Meanwhile, at the recent Google Cloud Next ’25 conference in Las Vegas, Alphabet CEO Sundar Pichai said, “The opportunity with AI is as big as it gets.”
Data center expenses
History suggests that Amazon and Alphabet will pay. Amazon has a long history of spending big on Capex for manufacturing its business. It created an entire warehousing and logistics network from scratches to speed up the delivery of goods sold. It was expensive, but helped the company convert into e-commerce beamoth.
It then changed and did the same thing with cloud computing, originally invented the infrastructure-e-e-service industry with Amazon Web Services (AWS), which is now its most profitable business. Many analysts initially questioned the company’s plans to spend the AWS to build and suspected that it would become a profitable business.
The alphabet did a lot in its Google Cloud business expenses in up-front costs, and tolerated the initial loss. However, the fruits of this labor began to shine in the previous quarter when the Google Cloud segment hit the profitability divine point, with operational income from 142% to $ 2.1 billion.
Back in 2017, on analysts Goldman Sachs Amazon recognized “a historical relationship between the quick investment period and the revenue rehabilitation”. He also noted that Amazon’s stock performed better after these cycles of intensive investment.
Image Source: Getty Image.
In his letter to shareholders, Amazon stated that data centers have attractive free cash flow (FCF) in investment and return to invested capital (ROIC) profile, and these assets have a useful life of 15 to 20 years or more. It also predicted that AI infrastructure pricing would be reduced, especially more chip options are available out. NvidiaToday, Amazon is also expected to become the biggest driver of AI cost in future compared to model training.
With the approximate to become rapidly important, both Amazon and the alphabet have developed their own custom AI chips designed for specifically estimated. Amazon said that its new trainium 2 chip has a 30% to 40% better price-to-demonstration ratio than the current graphic processing units (GPU). One of its biggest goals is less expensive for customers, which assumes that eventually will lead to more overall AI spending.
Meanwhile, the alphabet introduced its seventh generation AI chip, Ironwood. It said that the new chip is designed for “age”, which has increased calculation power and memory capacity. It is the first chip of the alphabet that is specifically designed for estimates, and was designed to handle models that “provide active generations of insight and interpretation.” It is the most energy-skilled chip to date.
Stock buying time
Amazon and alphabet have been investing heavy in AI, and these investments should be paid for a long time, especially with Microsoft slowing down their expenses. Cloud computing and AI services demand is increasing strong growth, as these companies help customers to create their own AI models and apps and run AI workloads on their platforms.
Both companies have also been at the forefront of developing custom AI chips to help reduce the cost of AI infrastructure. Since AI moves towards estimates, both companies are decreasing the overall cost by developing chips that consume low power and are specially designed to handle these functions.
AI is also allowing the rest of its businesses. Amazon AI is used to become more efficient in its logistics and warehouse operations and to make better product recommendations for your customers. The alphabet has made great progress with its latest Gemini 2.5 model, quickly caught in the AI race; This should help its discovery and advertising businesses, as some groundbreaking AI tools, such as its VO2 text-to-video generator.
With recent market sales, both stocks are trading on attractive assessment. If history is a signal, both will be the long -term AI winners, which will lead to solid long -term investment.
John McKay is a member of the Board of Directors of Motley Fool, a former CEO of Hole Foods Market, an Amazon Assistant Company. Suzanne Frey, an executive in Alphabet, is a member of the Board of Directors of the Motley Flower. Jeffrey is the condition in the alphabet of the cake. Motley is located near the flower and recommends the alphabet, Amazon, Goldman Sachs Group, Microsoft and NVidia. Micter flowers recommend the following options: Long January 2026 $ 395 calls on Microsoft and January 2026 $ 405 on Microsoft. The Motley Fool has a disclosure policy.
