Despite recent speculation that the advent of DeepSeek would lead to a slowdown in AI budgets, Big Tech companies are instead ramping up their investments in artificial intelligence. Amazon, the latest to make a major announcement, has predicted capital expenditures of over $100 billion in 2025, with the majority allocated towards AI capabilities for its cloud division, AWS.

During Amazon's fourth-quarter earnings call, CEO Andy Jassy stated that the company's Q4 2024 capital expenditures of $26.3 billion would be representative of its annualized spending in 2025, translating to a staggering $105.2 billion. This marks a significant increase from the $75 billion in capital expenditures Amazon expected to spend in 2024.

Jassy dismissed concerns that lower AI prices would negatively impact revenue, instead arguing that decreased costs would lead to increased demand for AI. He drew parallels between the current AI boom and the early days of the internet and cloud, where lower prices drove adoption and growth.

Amazon is not alone in its aggressive AI investment strategy. Meta CEO Mark Zuckerberg announced plans to spend "hundreds of billions" on AI in the long term, citing rising inference demand across the company's billions of users. Meta is expected to spend at least $60 billion on capital expenditures in 2025, primarily on AI.

Alphabet, the parent company of Google, has also boosted its capital expenditures for 2025 by 42% to $75 billion, with CEO Sundar Pichai justifying the spending by saying that decreased AI costs "will make more use cases feasible." Meanwhile, Microsoft announced last month that it would spend $80 billion on AI data centers in 2025 alone.

Microsoft CEO Satya Nadella recently tweeted about Jevons Paradox, the concept in economics that lower prices lead to increased demand, in response to the DeepSeek discussion. His tweet suggested that as AI becomes more efficient and accessible, its use will skyrocket, turning it into a commodity.

The commitment to massive AI investments by these tech giants suggests that they are confident in the long-term benefits of AI adoption, despite concerns about returns on their skyrocketing expenses. While it remains to be seen whether Jevons Paradox will hold true for Big Tech, one thing is clear: AI is becoming an increasingly critical component of their business strategies.

As the tech industry continues to evolve, it will be crucial to monitor the impact of these massive AI investments on the companies' bottom lines and the broader technology landscape. For now, it appears that Big Tech is betting big on AI, and the future of the industry will likely be shaped by these investments.