Q1 earnings from Microsoft and Meta show robust AI infrastructure spending continues despite prior market concerns.

Big Tech's continued commitment to artificial intelligence infrastructure spending has reassured Wall Street that earlier investor concerns about slowing capital expenditures were overblown. Microsoft and Meta released quarterly results on Wednesday that signaled both companies remain dedicated to their AI buildout plans despite potential tariff-driven cost increases on data center equipment sourced internationally. The strong results sparked rallies in both stocks and renewed confidence in AI-exposed companies across the market.

Microsoft reported that its capital expenditures, excluding finance leases, reached $16.75 billion in its fiscal third quarter, representing a nearly 53% increase. CEO Satya Nadella reiterated earlier this year that Microsoft plans to spend $80 billion in fiscal 2025. Meta similarly increased its 2025 capital expenditure guidance to account for "an increase in the expected cost of infrastructure hardware" from global suppliers. Citi analyst Christopher Danely noted in a Thursday memo: "Contrary to investors' worries of slowing capex, it appears that spending for AI continues to be unabated. AI infrastructure buildouts remain as key priorities for hyperscalers with the companies' willingness to absorb the costs of tariffs."

The hyperscaler earnings have bolstered prospects for semiconductor and infrastructure suppliers. Broadcom, which develops custom AI chips for Google, recorded $4.1 billion in AI revenue during the period—77% higher year-over-year—though shares remain down 15% for the year despite jumping more than 16% over the past month following the company's first-quarter beat. JPMorgan analyst Samik Chatterjee and Barclays analyst Tim Long both pointed to the results as evidence that robust investment momentum continues, citing limited near-term impact on capital expenditure trajectories despite recent tariff concerns.

Cloud and networking product providers have emerged as key beneficiaries of sustained hyperscaler spending. Chatterjee identified Arista Networks, Amphenol, and Coherent as advantaged positions, adding Arista to JPMorgan's "Analyst Focus List" in April with catalysts including anticipated revenue acceleration in 2026 and 2027 driven by higher ethernet adoption in AI data centers. Barclays analyst Tim Long highlighted that approximately 35% of Arista's revenue came from Microsoft and Meta in fiscal 2024, and noted that "ANET's share at MSFT is already significant at 60%+ and higher AI spending could drive more switching business for them."