WASHINGTON 27 October 2025 — America’s biggest technology companies are set to report their third quarter results this week under the growing shadow of an AI-driven valuation bubble, with investors questioning whether soaring artificial-intelligence spending can keep delivering returns.
According to LSEG data, revenue at Microsoft, Alphabet, Amazon, and Meta Platforms is expected to have risen strongly in the July–September period. Each company is likely to reaffirm plans to pour billions of dollars into AI infrastructure, insisting the long-term potential remains intact.
Yet warnings from business leaders including OpenAI CEO Sam Altman, Amazon founder Jeff Bezos, and Goldman Sachs CEO David Solomon have amplified fears that AI exuberance has outrun fundamentals.
AI Spending Soars, Returns Lag Behind
Together, the major cloud players are projected to spend US $400 billion on AI infrastructure this year. But an MIT study earlier in 2025 found that only about 5 percent of more than 300 AI projects delivered measurable performance gains.
“Overall, the models are not there,” said Andrej Karpathy, OpenAI co-founder and Tesla’s former AI chief. “I feel like the industry is making too big of a jump and is trying to pretend like this is amazing, and it’s not. It’s slop.”
That shortfall threatens the AI-fueled rally that has added roughly US $6 trillion to Big Tech’s combined market value since ChatGPT’s 2022 debut, offsetting the drag from Trump-era tariffs on the U.S. economy.
Circular Deals Stir Market Unease
Analysts have also flagged a surge of circular financing deals, reminiscent of the dot-com era.
- Nvidia is reportedly considering a US $100 billion investment in OpenAI, one of its largest compute customers.
- OpenAI has committed to US $1 trillion in AI-compute contracts, including US $300 billion with Oracle, though funding details remain opaque.
- Meta has entered a US $27 billion private-credit agreement with Blue Owl Capital to finance a new data-centre complex.
“When the same companies are both funding and relying on each other, decisions may no longer be based on real demand or performance,” warned Ahmed Banafa, engineering professor at San Jose State University. “When they become the norm, they increase systemic risk.”
Cloud Growth Continues but Margins Tighten
Despite capacity bottlenecks, cloud-computing divisions remain the key growth engines:
- Microsoft Azure revenue is estimated to have jumped 38.4 percent.
- Google Cloud may post 30.1 percent growth.
- Amazon Web Services is expected to rise 18 percent, maintaining its lead but trailing rivals in momentum.
Overall, Microsoft’s total revenue likely rose 14.9 percent, Alphabet’s 13.2 percent, Amazon’s 11.9 percent, and Meta’s 21.7 percent, data from LSEG show.
Profit growth, however, is expected to slow as AI-related costs surge — with all but Microsoft set to report their weakest earnings increase in 10 quarters.
Investor Caution Meets Long-Term Optimism
While some investors are scaling back exposure to over-hyped AI names, others believe adoption will eventually justify the spending spree.
“Adoption may be low right now but that’s not a forward indicator,” said Eric Schiffer, CEO of Patriarch Organization. “With greater spend and greater innovation, the adoption is going to grow. I don’t think we are at a bubble stage yet.”
Microsoft, Alphabet, and Meta will announce results on Wednesday, followed by Amazon on Thursday, in what could prove a defining week for gauging whether AI’s promise is starting to meet performance.
Source: Reuters
