If you want to understand what will drive the markets for the rest of 2025, forget the noise and focus on one thing: earnings. Last week, Wall Street got jittery after big tech companies, Microsoft and Meta reported results – and the headlines were predictable.
“Meta overspending on AI”…
“Tech stocks drop on capex fears”…
You could almost hear the collective gasp from short-term traders.
But the truth us, they’re missing the real story.
When big tech open their wallets, every company downstream gets paid…
Revenue, orders, active users and margins aren’t the only important metrics in the world of AI
CAPEX – the amount of money Big Tech is pouring into AI infrastructure is the lifeblood of the entire ecosystem.
Why?
Because when the giants invest, that capital cascades through the entire AI ecosystem. The data centres need chips, networking gear, cooling systems, and storage. The chipmakers need equipment suppliers. The equipment suppliers need materials and software tools.
It’s one massive, high-speed money flow – and it all starts at the top. And right now, that top is overflowing.
By my count, Microsoft, Meta, and Alphabet will collectively spend around $250 billion on AI-related capex in 2025. That’s already a staggering number.
But based on the latest guidance from their recent earnings calls, 2026 spending will jump another 44% to over $360 billion.
That’s more than $100 billion in new AI spend in just one year.
Microsoft’s CFO Amy Hood even admitted they expected to have “caught up” on AI infrastructure by now, but demand keeps outpacing supply. The problem isn’t that they built too much; it’s that they can’t build fast enough.
Every link in the AI supply chain is set to benefit because the pipeline is wide open
When you hear “capex surge,” don’t think of it as a cost. Think of it as a profit signal.
Every dollar Big Tech spends becomes revenue for someone else – and right now, that “someone else” includes some of the most profitable and fastest-growing companies in the market.
We’re only a few weeks into earnings season, but the message from Silicon Valley is clear: AI demand is still on fire.
For the companies that have released earnings: Margins and profits are expanding. Orders are growing and backlogs are healthy.
So yes, traders can panic over near-term earnings noise. But long-term investors know better. As long as Big Tech keeps spending, the
AI winners will keep winning.
These are some AI plays to watch this earnings season…
1. Arista Networks sells the ultra-fast connectivity gear that makes AI clusters work – from switches and optical interconnects to the networking fabric that ties it all together.
2. Dell Technologies is becoming the “arms dealer” of AI infrastructure, assembling and delivering the servers that power hyperscale deployments.
3. Marvell Technology is quietly powering the backbone of AI data movement with its custom chips
4. Micron’s cashing in on the memory supercycle, as every AI training run consumes mountains of high-bandwidth DRAM and advanced storage.
5. Vertiv has become a critical cog in the AI engine room, supplying advanced cooling systems and power management to data centres running thousands of GPUs.
If history has taught us anything, it’s this…
When the world’s richest companies are still scrambling to meet demand, that’s not the end of a boom, it’s the beginning of the next one.
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