The tech landscape is shifting as major companies commit big to AI, and investors are watching every move. With earnings season on the horizon, there’s a real curiosity about whether the hefty investments in AI will translate into lasting growth amidst an unpredictable market.
Eric Sheridan from Goldman Sachs recently pointed to DeepSeek—a budget-friendly AI model from a Chinese startup—as a signal that the focus is now on real returns from AI spending. He wonders how businesses and consumers are weaving these technologies into everyday operations to drive productivity and boost profit margins.
Tech giants like Amazon, Microsoft, Alphabet, and Meta are eyeing over $300 billion in AI investments for 2025, up from $246 billion last year. With fierce competition pushing the development of advanced language models, it’s hard to say if these spending levels will continue or shift in unexpected ways.
Across the board, investors are seeking tangible results. While Nvidia’s performance garners plenty of attention, the broader trend is moving towards widespread use of AI in software and cloud computing. Smaller companies are also catching on—with more AI mentions during Russell 2000 earnings calls and expectations that monetisation will ramp up by 2026. For Big Tech, proving that AI can underpin robust software margins remains a key challenge, especially as tariff pressures complicate the picture.
Despite some short-term uncertainties, many experts believe in AI’s long-term structural benefits. Nadia Lovell from UBS Global Wealth Management sees AI as a central growth driver for the S&P 500, and Jeremy Siegel at WisdomTree stresses the importance of companies demonstrating AI’s everyday practical benefits to maintain consumer confidence.
