Big Tech's Capex Spending Helps Offset Tariffs Impact

Big Tech companies like Amazon, Apple, Google, Microsoft, and Meta Platforms are increasing their capital expenditure (capex) guidance for 2025, which could offset the impact of President Trump's tariffs. The tech sector's growth has helped soften the blows dealt to the market by the tariffs and the Federal Reserve's refusal to cut interest rates. Experts predict that the high AI and data center spending from these companies will mitigate the effects of tariffs, but it may not offset other economic trends.

Big Tech companies, including Amazon, Apple, Google, Microsoft, and Meta Platforms, are increasing their capital expenditure (capex) guidance for 2025, signaling a substantial investment in artificial intelligence (AI) and data centers. This move could offset the impact of President Trump's tariffs on the broader economy. The tech sector's growth has helped soften the blows dealt to the market by the tariffs and the Federal Reserve's refusal to cut interest rates.

Microsoft, for instance, expects to spend $88.7 billion in 2025, a significant increase from its earlier projections [1]. Meta Platforms anticipates spending between $66 billion and $72 billion, while Alphabet (Google) plans to allocate $85 billion, surpassing its initial estimate of $75 billion [1]. Amazon, on the other hand, has already spent $31.4 billion in the second quarter of 2025 alone, with plans to reach a total of $118 billion in capital expenditures for the year [2].

The increased spending on AI and data centers is driven by the firms' desire to capitalize on the growing demand for these technologies. Microsoft's CFO, Amy Hood, stated that the company's spending will grow at a slower pace in 2026, but it will continue to invest in AI and cloud offerings [1]. Similarly, Meta's CFO, Susan Li, expects another year of significant CapEx growth in 2026 to meet the needs of AI efforts and business operations [1].

Investors have shown resilience to these substantial spending increases, with three out of the four firms' shares surging after their quarterly earnings reports. Microsoft's market cap surpassed $4 trillion, while Meta's shares climbed by 11% [2]. However, Amazon's stock dipped 8% despite beating financial estimates, raising questions about its AI plans [1].

The high AI and data center spending from these companies may mitigate the effects of tariffs, but it may not offset other economic trends. The U.S. trade deficit narrowed in June on a sharp drop in consumer goods imports, and the trade gap with China shrank to its lowest in more than 21 years [3]. However, the services sector shows signs of softening due to tariffs, as businesses report increased costs and reduced activity [3].

Despite these challenges, Big Tech firms continue to lead in AI innovation, with investors showing optimism about the potential long-term benefits of these investments. However, caution remains, as AI spending is not a guaranteed return on investment [1].

References:
[1] https://finance.yahoo.com/news/big-techs-ai-investments-set-to-spike-to-364-billion-in-2025-as-bubble-fears-ease-143203885.html
[2] https://www.ainvest.com/news/big-tech-firms-set-spend-364-billion-2025-ai-investments-shares-surge-2508/
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3TX11A:0-us-trade-gap-skids-to-2-year-low-tariffs-exert-pressure-on-service-sector/