The artificial intelligence boom continues to reshape the tech industry, driving massive investments and propelling companies like Nvidia to unprecedented valuations, with the chipmaker surpassing a $5 trillion market capitalization. Microsoft and Apple have also reached $4 trillion valuations, fueled by AI demand. Collectively, Meta, Microsoft, and Alphabet's Google spent $78 billion on AI infrastructure last quarter, an 89% increase year-over-year. While Google's cloud growth and user adoption of its Gemini AI assistant offer reassurance, Meta faces investor scrutiny over its substantial AI outlays, with Barclays lowering its price target for the company due to these costs. Amazon's cloud services (AWS) are also experiencing a surge driven by AI adoption, leading to a significant rise in its stock price. Companies specializing in AI infrastructure, such as CoreWeave and Nebius Group, are attracting investor interest with strong growth. Even traditional companies like Caterpillar are benefiting, seeing increased orders for equipment used in building AI data centers. Amidst these developments, Amazon and Taiwan Semiconductor (TSM) are being viewed as offering value, with strong fundamentals despite broader market concerns about an AI bubble. In the startup space, Legora has achieved a $1.8 billion valuation for its AI legal work tool, while Prospero.ai is nearing the end of its equity crowdfunding campaign for its AI investing platform.
Key Takeaways
- Nvidia has surpassed a $5 trillion market capitalization, driven by demand for its AI chips.
- Microsoft and Apple have reached $4 trillion valuations amid the AI boom.
- Meta, Microsoft, and Google collectively spent $78 billion on AI infrastructure last quarter, an 89% increase year-over-year.
- Meta faces investor concerns regarding its significant AI spending, with Barclays lowering its price target.
- Amazon's cloud services (AWS) are seeing increased demand driven by AI adoption, boosting its stock.
- CoreWeave and Nebius Group are emerging as key players in AI infrastructure with strong growth.
- Caterpillar is experiencing increased orders for equipment used in building AI data centers.
- Amazon and Taiwan Semiconductor (TSM) are considered value stocks with strong fundamentals in the AI sector.
- Swedish startup Legora secured a $1.8 billion valuation for its AI legal work tool.
- Prospero.ai, an AI investing platform, is nearing the end of its equity crowdfunding campaign.
Meta, Microsoft AI spending tests investor patience
Meta and Microsoft are significantly increasing their spending on artificial intelligence infrastructure, including data centers and servers. This surge in capital expenditures, reaching $78 billion combined last quarter, up 89% from the previous year, is causing concern among investors. While Alphabet's Google also increased spending, its cloud growth and user numbers for its Gemini AI assistant provided some reassurance. Meta, however, warned of even larger outlays in 2026, raising questions about the return on investment for its AI initiatives.
AI spending fuels tech giants toward trillion-dollar valuations
Massive investments in artificial intelligence are propelling major tech companies to new heights, with Nvidia surpassing a $5 trillion market capitalization. Microsoft and Apple also reached $4 trillion valuations. Alphabet, Meta, and Microsoft collectively spent $78 billion on AI infrastructure last quarter, an 89% increase year-over-year. While Google Cloud saw significant revenue growth, Meta's spending is focused internally, raising questions about its return on investment. Demand for AI services remains high, with Microsoft noting that demand continues to outpace supply.
CoreWeave, Nebius stocks shine in AI infrastructure boom
Companies like CoreWeave and Nebius Group are emerging as key players in the AI infrastructure market, attracting significant investor interest due to their strong growth rates. Despite high valuations, their potential in the rapidly expanding 'neocloud' sector is driving demand. CoreWeave recently entered the federal market and has secured major contracts, with Wells Fargo setting a $170 price target. Nebius Group, backed by Microsoft, also shows rapid adoption and growth in AI-specific services, making both stocks attractive for investors willing to handle volatility.
Amazon, Taiwan Semiconductor offer AI value amid bubble fears
Despite widespread concerns about an artificial intelligence bubble, Amazon and Taiwan Semiconductor (TSM) are presented as compelling value stocks. While the tech sector sees massive AI investment, these companies offer strong fundamentals and reasonable valuations. Amazon's cloud services (AWS) are poised for AI growth, and its stock, trading at a 25.8 forward P/E, is considered a relative value. Taiwan Semiconductor, a key chip manufacturer, also shows no signs of a bubble with a 25.3 forward P/E, benefiting from its wide economic moat and AI demand.
Legora secures $1.8 billion valuation for AI legal work tool
Swedish startup Legora has achieved a $1.8 billion valuation following its Series C funding round, led by clients like T. Rowe Price. Founded in 2023, Legora develops AI tools to automate repetitive tasks for lawyers, such as drafting contracts. The company plans to use the new funding to train its AI models and expand its team, including its recent move into the US market. Legora utilizes AI models like Anthropic's Claude Sonnet 4.5 to adapt and provide specialized legal services, aiming to disrupt traditional legal billing models.
AI boom boosts Nvidia and Caterpillar
The artificial intelligence boom is driving unprecedented growth for both new and old economy companies. Nvidia's value surpassed $5 trillion, fueled by demand for its AI chips, while Caterpillar's stock soared due to surging orders for construction equipment used in building AI data centers. Caterpillar reported a 33% increase in sales for its power generation segment, driven by data center applications. This surge signifies a major reindustrialization, with demand for AI infrastructure and the means to build it at an all-time high.
Barclays lowers Meta price target due to AI investment costs
Barclays has reduced its price target for Meta Platforms to $770 from $810, while maintaining an 'Overweight' rating. This adjustment comes after Meta's recent quarterly report, which showed strong revenue but indicated significant future investments in AI technology. Although Meta is seen as currently behind in AI development, Barclays believes its new team can advance the company, despite temporary impacts on free cash flow. The firm's high-margin advertising business helps offset AI and metaverse losses, and long-term AI investments are expected to yield positive results.
Prospero.ai crowdfunding campaign nears end on Republic
Prospero.ai, an AI-powered investing platform designed to help retail investors trade like professionals, is in the final day of its equity crowdfunding campaign on Republic. The campaign has already attracted over $470,000 from more than 450 investors. This marks the last chance for new investors to participate in the funding round before it officially closes.
Nvidia's journey from near failure to $5 trillion company
Nvidia, founded in 1993, has achieved a remarkable transformation from a struggling startup to the world's first $5 trillion company. Facing near failure in its early years, including significant layoffs in 1996, Nvidia's resilience and vision allowed it to pivot. The company diversified beyond gaming in the 2010s, with its graphics processing units (GPUs) becoming essential for powering complex AI models used by companies like Google, Microsoft, and OpenAI. CEO Jensen Huang views the current AI boom as an industrial revolution, emphasizing the need for American leadership.
Google stock climbs, Meta stock drops on AI investment news
Alphabet's stock is rising following its earnings report, which highlighted cloud strength despite increased AI spending projections. In contrast, Meta's stock is falling as concerns about its AI overspending resurface. RBC Capital Markets analyst Brad Erickson noted that Alphabet is successfully addressing investor confidence in AI, unlike Meta, by meeting key criteria for AI investment communication.
Amazon shares surge on strong cloud growth driven by AI
Amazon's stock price surged over ten percent after the company reported better-than-expected earnings, largely driven by a significant increase in demand for its cloud computing services. This growth in cloud services mirrors similar positive reports from Amazon's major competitors, with all companies attributing the surge to the adoption of artificial intelligence services.
Sources
- Meta, Microsoft Test Investorsā Patience With AI Spending Spree
- AI-fueled spending surge pushes tech giants to new trillion-dollar milestones
- CoreWeave and Nebius Are Solid Stocks to Bet on AI Infrastructure Explosion
- 2 AI Value Stocks Thatāll Have You Thinking Thereās No Bubble
- Legora Valued at $1.8 Billion For AI Tool Doing Legal Grunt Work
- AI boom powers new-school Nvidia and old-school Caterpillar to new heights
- Meta Platforms stock price target lowered by Barclays on AI investment costs By Investing.com
- Prospero.ai Nears Close of Equity Crowdfunding Campaign on Republic ā Final Day to Join the AI Investing Revolution
- Nvidia nearly went under 3 years into its existenceānow it's the world's first-ever $5 trillion company
- Google stock rises, Meta stock plunges: A tale of 2 AI stories
- Amazon shares surge as AI boom drives cloud growth
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