The A.I. Boom’s Uncertain Payoff

Why It Matters

The scale of AI‑focused capex signals a strategic shift for Big Tech, influencing investor expectations and competitive dynamics across the tech sector.

Key Takeaways

• Meta capex target $115‑$135 billion, AI‑centric.
• Microsoft Q4 capex $37.5 billion, 65% YoY growth.
• Meta shares rose 8% after AI spending announcement.
• Microsoft stock fell 6% despite record AI investment.
• AI payoff remains uncertain, investors watch profitability.

Pulse Analysis

The AI arms race is reshaping capital allocation at the world’s largest tech firms. Meta’s decision to allocate up to $135 billion to capex, with a significant portion directed toward AI research, infrastructure, and product integration, underscores its ambition to dominate the next generation of digital experiences. This budget represents nearly a doubling of the previous year’s spend, reflecting confidence that AI will drive user engagement, ad revenue, and new business models. Analysts are closely monitoring how Meta translates this massive outlay into sustainable growth.

Microsoft’s recent earnings reveal a parallel, albeit more measured, approach. The company’s $37.5 billion capex surge—up 65% YoY—covers cloud data centers, AI chips, and software development. Despite the aggressive investment, the market reacted negatively, with shares sliding over 6% as investors weighed short‑term earnings pressure against long‑term strategic positioning. The contrast between Meta’s share rally and Microsoft’s dip highlights divergent investor sentiment: confidence in Meta’s consumer‑focused AI ecosystem versus caution about Microsoft’s enterprise‑centric spend.

Across the industry, the payoff of these AI expenditures remains speculative. While AI promises productivity gains, new revenue streams, and competitive differentiation, the path to profitability is fraught with technical risk, regulatory scrutiny, and talent shortages. Companies must balance rapid deployment with disciplined cost management to avoid over‑investing in unproven technologies. For investors, the key is to assess each firm’s ability to monetize AI—through ad platforms, cloud services, or emerging products—while monitoring margin impact and the broader macro environment.

The A.I. Boom’s Uncertain Payoff

January 29, 2026 · By Andrew Ross Sorkin, Bernhard Warner, Niko Gallogly

Investors liked what they heard from Mark Zuckerberg, Meta’s CEO, about the company’s latest results, including its plans for artificial intelligence. Credit…Jason Henry for The New York Times

Andrew here. The AI boom continues unabated. Meta said last night that it would spend up to $135 billion on capex this year, much of it on its AI efforts — and its stock went up. More below.

Another story that could have a generational impact: growing support for “Trump Accounts,” the investment vehicles for children born between calendar years 2025 and 2028 that will be seeded with $1,000 each. Bank of America, JPMorgan Chase and Wells Fargo now plan to match those funds for employees.

Other companies are expected to follow suit — as is a famous musician who is making a donation to her fans. Check out the picture of the day below.

Big Tech’s big spend

Coming into earnings season, investors had big questions about technology giants’ end game for artificial intelligence. How much more would they spend? And what will the payoff be?

So far, the answers are: a lot, and it’s still not entirely clear.

The first helps explain why Microsoft’s stock is down more than 6 percent after the company reported earnings on Wednesday. The second is partly why Meta’s is up 8 percent.

Companies’ AI spending plans remain astronomical. Microsoft spent $37.5 billion in capital expenditures in its most recent quarter, up 65 percent year‑on‑year. Meta said it planned to spend $115 billion to $135 billion on capex this year, nearly double the $72 billion it spent last year.

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About the authors

• Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.

• Bernhard Warner is a senior editor for DealBook, a newsletter from The Times covering business trends, the economy and the markets.

• Niko Gallogly is a Times reporter covering business for the DealBook newsletter.