AI writes up to 30% of code at Microsoft, CEO says
Despite recent reports sounding alarms about big tech pulling back on AI-driven data center capital expenditures, executives have calmed the markets during first-quarter earnings calls by reaffirming their commitments to build out the tech.
Apple, Amazon, Google, Meta and Microsoft said they are significantly increasing investments in data centers and other infrastructure to bolster AI.
According to a May 6 report by market analysis company The Insight Partners, the data center equipment market is expected to balloon to $669 billion by 2031, a compound annual growth rate of 15.7%.
Meta
“Our CapEx growth this year is going toward both generative AI and core business needs,” Meta Chief Executive Mark Zuckerburg said during his company’s Q1 earnings call April 30.
The tech giant said that it is boosting CapEx by more than 10% in 2025, pushing annual spending to $64 billion to $72 billion from an estimated range of $60 billion to $65 billion to meet infrastructure requirements for rising AI demand, Chief Financial Officer Susan Li said during the call.
Godman Sachs and financial conglomerate Nomura Holdings are among Meta’s AI clients, according to the company.
Google reported a CapEx of $17.2 billion for Q1, up 43% year over year.
The company is on track to spend $75 billion this year, CFO Anat Ashkenazi said during the April 24 earnings call.
“The expected CapEx investment level may fluctuate from quarter to quarter, due to the impact of changes in the timing of deliveries and construction schedules,” she said.
Apple
Apple announced the biggest CapEx of the pack, reporting it will spend $500 billion over four years to develop AI infrastructure and manufacturing facilities, according to a Feb. 24 release.
While the company has been mum on details of the investment, a significant part of the spend will be state-of-the-art data centers in Michigan, Oregon, Texas, Arizona and Nevada, CEO Tim Cook said during Apple’s earnings call on May 1.
Microsoft
Microsoft similarly reported planned CapEx growth to support tech spending, and its commitment remains unchanged, CEO Satya Nadella said.
The Redmond, Wash.-based company will spend $80 million on data centers and AI, Nadella said during its Q1 earnings call Jan. 27.
BNY, NatWest and S&P Global are among Microsoft’s AI clients, according to Bank Automation News’ prior reporting.
“You’ve seen that historically, when we went through the prior cloud transitions, you see CapEx accelerate to build out data center footprint,” CFO Amy Hood said during the earnings call, adding that a similar pattern emerged with the AI build out.
AI as a developer
As big tech develops AI for commercial and consumer uses, the companies are also deploying it to increase efficiency.
For example, at Microsoft, AI is writing “maybe 20%, 30% of the code that is inside of our repos today and some of our projects are probably all written by software,” Nadella said during a conversation with Zuckerberg at Meta’s inaugural LlamaCon AI developer event on April 29.
Zuckerburg responded by saying that he hopes that next year “maybe half the [Meta code] development is going to be done by AI.”
FIs that are using AI to write code include:
“AI will augment rather than fully replace developers in the foreseeable future,” Srawesh Subba, practice director at think tank Everest Group, told BAN. AI-generated code often lacks full understanding of business logic, security implications and regulatory requirements, so developers need to check AI coding tools, he added.
Rising AI consulting
As AI growth continues, tech giant IBM is experiencing a boom in its IT consulting services.
“In generative AI, we continue to see strong traction,” Arvind Krishna, IBM chairman, president and CEO, said during the company’s Q1 earnings call on April 23. “Our [gen AI revenue] is now over $6 billion inception-to date, up over $1 billion in the quarter.”
Nearly one-fifth of this business, $1.2 billion comes from AI software sales, and the remaining four-fifths, $4.8 billion is from consulting, Krishna said.
IBM launched its gen AI platform watsonX in May 2023 and says Truist, NatWest and Capital Bank of Jordan are clients.
Rising cloud revenue
As big tech gears up to deploy big bucks for AI data centers, the companies’ cloud revenues continue to climb.
Microsoft reported cloud revenue of $42 billion, up 22% year over year.
“Cloud and AI are the essential inputs for every business to expand output, reduce costs and accelerate growth,” Nadella said, adding that Microsoft expects cloud revenue will grow with increased AI adoption.
Said Google CEO Sundar Pichai: “Cloud grew rapidly with significant demand for our solutions, and you saw our leadership in AI at Cloud Next across infrastructure, agents and more. Our differentiated full-stack approach to AI continues to be central to our growth.”
