As emerging companies like DeepSeek are booming in the AI field, recently the four major traditional technology giants in the USA plan to increase their investments in AI by 2025 in order to maintain market leadership and technological advantages.

$Amazon (AMZN.US)$It is expected to invest over 100 billion dollars in AI infrastructure by 2025, leading competitors in scale.

$Microsoft (MSFT.US)$ It is expected to invest about 80 billion dollars in AI Datacenter for the fiscal year 2025, while next year's spending will further increase, although the growth rate will slow down.

$Alphabet-A (GOOGL.US)$ The parent company Alphabet is expected to have capital expenditures of 75 billion dollars for AI this year.

$Meta Platforms (META.US)$ It is expected that by 2025, investments in AI-driven programs will reach 60 to 65 billion USD.

The major USA technology giants are concentrating their spending, resulting in strong growth in their cloud business. This scale of computing power deployment, along with the application of AI technology, has brought profound changes to certain Industries, and leading companies in multiple fields are showing signs of improved performance. Since the fourth quarter of last year, AI application stocks in the USA have emerged one after another, with some companies having experienced substantial increases for several consecutive quarters.

Some viewpoints suggest that the emergence of DeepSeek enables small and medium-sized enterprises to develop AI applications with a lower threshold, accelerating industry penetration. Business software represented by Agent AI is expected to quickly take hold, improving corporate work efficiency and driving better performance in the Software Sector compared to Hardware.

Many Institutions investors believe that with the increase of capital, the USA Software industry has benefited from AI, and it is expected to become the leading sector for AI investment by 2025.

Technology giants are pouring money into AI like crazy.

Since the debut of ChatGPT in 2022, technology giants have invested hundreds of billions of dollars in AI.

These companies are extensively utilizing.$NVIDIA (NVDA.US)$The GPUs are used to expand Datacenters and improve their AI models. However, the recent rise of open-source DeepSeek has impacted the entire Industry, as its training costs are only a small fraction of some American competitors.

The reduction in training costs has triggered a market sell-off, resulting in a decrease in the stock prices of AI chip manufacturers like NVIDIA.$Broadcom (AVGO.US)$In one day, the total Market Cap decreased by 800 billion dollars.

The 'DeepSeek moment' has not compelled the CEOs of American technology giants to slow down their significant capital expenditures.

For Amazon, Alphabet, and Microsoft, despite high AI spending, it will bring tremendous benefits to Cloud Computing businesses, which are the main engines of growth. These technology giants have stated that customers are demanding more AI tools and larger workloads when running in the cloud. As a result, several major technology giants are experiencing strong growth in Cloud Computing Service.

Melius Analyst Ben Reitzes wrote in a report to clients, 'A growth of 31% for a large business like Microsoft Azure Cloud is quite remarkable, although growth has slowed from 33%, 34%, and 35% in the previous three quarters — however, the market generally expects acceleration in the quarters of March and June 2025.'

Google's cloud revenue for 2024 is 12 billion dollars, a 30% increase compared to 2023. In the Earnings Reports conference call, Google Chief Financial Officer Anat Ashkenazi stated that the company's cloud division generates billions of dollars in revenue each year from AI infrastructure and generative AI solutions.

It is worth noting that among the "seven giants of the US stock market," only $Apple (AAPL.US)$ remains outside the AI arms race, with its capital expenditure of only 10 billion dollars in 2024 and no guidance for any growth. Apple relies on renting cloud computing from other companies, self-developed chips, and AI models on small devices. In the post-DeepSeek era, such a monetization model may prove to be the correct strategy that Apple has identified.

Analysts at Morgan Stanley point out that the increasing spending by technology companies is strengthening the case for bullish AI and cloud-related capital expenditure stocks.

AI serving Software has been validated, and Software may outperform Hardware.

The emergence of DeepSeek has significantly reduced the cost of training AI models. For example, the inference cost of the DeepSeek model has dropped to 1% of that of GPT-4. The scaled deployment of computing power allows small and medium-sized enterprises to develop AI applications at a lower threshold, accelerating industry penetration. Enterprise software represented by Agent AI is expected to be implemented quickly, enhancing corporate work efficiency and driving the Software sector to perform better than Hardware.

Since the fourth quarter, many AI application stocks in the US have emerged, with some companies experiencing significant increases over multiple consecutive quarters.

Zheshang Securities believes that on one hand, some fields have shown a continuous upward trend since 2023, such as Advertising Marketing, Data, and Education. The common feature of leading companies in these three fields is an early layout of AI applications and a rapid enhancement of Business through AI.

On the other hand, some sectors that previously performed mediocrely have shown better performance since the fourth quarter of last year. These companies are mainly focused on B-end software, with representative directions including data analysis, e-commerce, finance, accounting, and CRM. From the driving factors perspective, these B-end software applications have undergone a long period of exploration in business models, and recently, several leading companies in multiple fields have shown signs of performance improvement, leading to a significant rise in stock prices in the fourth quarter.

Ashley MacNeill, Managing Director of Vista Equity Partners and head of the equity markets division, noted that the performance of American Software has reversed the trend in the hardware sector. The most direct fundamental factor is that we have seen generative AI continue to contribute to revenue growth and margins for vendors from the quarterly reports of software companies.

Statistics on the earnings reports of AI downstream applications indicate that overall profitability has shown an upward trend year-on-year since 2024. From the end of October to the end of November, American stocks disclosed their third quarter reports intensively, with some AI application fields and companies achieving new highs in their disclosed earnings reports, including$Cardinal Health (CAH.US)$、$Innodata (INOD.US)$、$Duolingo (DUOL.US)$、$Shopify (SHOP.US)$、$Palantir (PLTR.US)$、$Applovin (APP.US)$The performance growth trend of these AI application companies has opened up the market's imagination space for AI-enabled applications and their contribution to company performance.

Stefan Slowinski, Chief Analyst for Global Software Industry at Exane of BNP Paribas Securities, expressed his views in an interview: In the AI field of 2025, software will take over from Hardware/Semiconductors as the greatest driver of growth. $Microsoft (MSFT.US)$ and$Salesforce (CRM.US)$As a pioneer of growth, "My clients are looking for Software Stocks for 2025. Although they are concerned about overvaluation, I believe that due to the upward application of AI Agents, the valuation is reasonable."

A report from an American bank analyst at the beginning of the year pointed out that considering the increasing number of Consumers and Businesses using AI, the American Software Industry is still undervalued; the rise of autonomous AI (i.e., AI that can proactively perform tasks without ongoing human supervision) is likely to play an important role in the next phase of growth for software companies.

So, how to find stocks with AI application potential for 2025? Futu News has compiled a list of some "AI+" Software Stocks for mooers to reference:

The AI application boom is coming! Make good use of the 'investment theme' feature by opening Futubull > US stocks > investment themes.AI application software stocks, capture investment opportunities.

Editor/Rocky