On Friday Eastern Time, the U.S. stock market $Semiconductors (LIST2015.US)$ 、 $Semiconductor Equipment & Materials (LIST2016.US)$ 、 $Optical Communication (LIST23979.US)$ The concept surged across the board. $NVIDIA (NVDA.US)$with a significant increase of 7.5%, nearing its largest single-day gain in nearly 10 months, driving $Dow Jones Industrial Average (.DJI.US)$toward the 50,000-point threshold.
Previously, six of the Mag 7 had already released their earnings reports. The most notable detail was that Google, Microsoft, Amazon, and Meta are projected to collectively spend approximately $650 billion on capital expenditures in 2026.
Last week, Meta announced that its full-year capital expenditure could rise to as much as USD 135 billion, representing a potential increase of 87%. Meanwhile, Microsoft reported a 66% year-over-year increase in capital expenditure for the second fiscal quarter, with analysts expecting its capital expenditure for the fiscal year ending June to approach USD 105 billion.
This week, Google and Amazon disclosed even higher capital expenditure figures, pushing the AI arms race to new heights. Google plans to invest up to USD 185 billion this year, while Amazon announced a capital expenditure plan of USD 200 billion for 2026.
DA Davidson analyst Gil Luria stated that these four companies 'view the race to provide AI computing power as the next 'winner-takes-all' or 'winner-takes-most' market,' and 'none are willing to lose.' These funds will be used for building new data centers and the necessary supporting equipment to operate them, including AI chips, network cables, and backup generators.
AI 'arms race' shakes Wall Street
The aggressive spending by tech giants has made Wall Street uneasy. $Microsoft (MSFT.US)$ 、 $Alphabet-A (GOOGL.US)$ and $Amazon (AMZN.US)$Their stock prices fell after the earnings reports were released, and $Meta Platforms (META.US)$ as early as the Q3 report, its stock price plummeted due to excessive capital expenditures.
Tomasz Tunguz, an investor at Theory Ventures, explained: "You originally had these machines that continuously generated cash, but suddenly they need this cash, and more of it, so they start borrowing."
Gil Luria, an analyst at DA Davidson, stated: "These four companies view providing AI computing power as the next winner-takes-all or winner-takes-most market. The question is how they will afford it — Meta and Google primarily derive their profits from digital advertising; Amazon is the largest online retailer and cloud service provider; and Microsoft is the leading commercial software vendor. Each holds a dominant position in its respective industry and possesses substantial cash reserves. Their willingness to invest heavily in an AI-driven future means these reserves, along with investors' patience, will be tested."
NVIDIA CEO Jensen Huang publicly speaks to 'extinguish the flames'
On Friday, February 6, Eastern Time, Huang stated in an interview that the surge in capital expenditures on AI infrastructure within the technology industry is reasonable, appropriate, and sustainable. This 'largest-scale infrastructure construction in human history' is driven by 'extremely high' demand for computing power.
Huang noted that the cash flow of all these technology companies will begin to rise, and the construction of AI infrastructure will continue for seven to eight years. He emphasized that AI has become 'extremely useful and powerful,' with its adoption rate becoming 'extremely high.'
Huang said, 'As long as people continue to pay for AI, and AI companies can profit from it, their growth will double, double, double, and double again.'
He cited specific examples to illustrate how NVIDIA's clients are profiting from AI. Meta is using AI to transform recommendation systems that previously ran on CPUs into systems powered by generative AI and agents; Amazon Web Services (AWS) will influence the retail giant’s product recommendation methods through its use of NVIDIA chips; Microsoft will leverage NVIDIA-driven AI to enhance its enterprise software.
Huang particularly praised OpenAI and Anthropic, two leading AI labs, stating that they are both 'making big money.' NVIDIA invested $10 billion in Anthropic last year, and earlier this week, Huang also indicated plans for a significant investment in OpenAI’s next funding round. He said, 'If they can have twice the computing power, their revenue will grow fourfold.'
He also pointed out that all graphics processing units (GPUs) NVIDIA has sold in the past—even including the six-year-old A100 chips—are currently being rented, reflecting sustained demand for AI computing power. Huang believes that, unlike the early days of internet infrastructure development, there is no idle infrastructure now.
Global semiconductor industry revenue is expected to surpass the $1 trillion mark for the first time this year.
On Friday (February 6) local time, the Semiconductor Industry Association (SIA) released a report stating that, driven by advancements in artificial intelligence (AI) and the comprehensive integration of chip technologies across all sectors of the economy, global semiconductor industry revenue will exceed the $1 trillion threshold for the first time this year.
SIA represents most American chip companies. Its data shows that global chip sales will reach $791.7 billion in 2025, an increase of 25.6% from the previous year.
SIA CEO John Neuffer stated, "When our industry grows, it means other industries will experience exponential benefits. Our technology serves as the foundation for nearly all key strategic industries, which is a very positive fundamental signal."
In terms of specific segments, the fastest-growing and largest chip category is$NVIDIA (NVDA.US)$、 $Advanced Micro Devices (AMD.US)$And $Intel (INTC.US)$ logic chips produced by Advanced Micro Devices. By 2025, sales of these chips are expected to grow by 39.9%, reaching USD 301.9 billion.
The second-largest category is memory chips. Amid supply-demand tensions driven by artificial intelligence (AI), memory chip prices surged significantly, with sales growing by 34.8% to reach $223.1 billion.
$Alphabet-C (GOOG.US)$ 、$Microsoft (MSFT.US)$And $Meta Platforms (META.US)$ 、 $Amazon (AMZN.US)$ Tech companies such as Mag 7 are accelerating the construction of AI infrastructure, absorbing large amounts of memory chip supplies and causing shortages, leading to rising memory chip prices.
In terms of regional distribution, growth was observed in the Asia-Pacific region, the Americas, and Europe, with Japan being the only region to experience a decline.
Neuffer stated that the semiconductor industry will continue to experience its typical cyclical fluctuations in the future, but the long-term upward trend has become very clear.
"Our industry has always been accompanied by ups and downs, and there is no doubt that this will continue," he said. "But the entire 'pie' is continuously growing larger."
"The general sentiment I've heard is, 'No one knows to what extent AI infrastructure development will progress a year from now, but my order book is completely full,'" Neuffer said. "At least for the next year, we are still on a fairly, fairly robust growth trajectory."
As evidence, Taiwan Semiconductor, the leading wafer foundry company, earlier reported…$Taiwan Semiconductor (TSM.US)$Set a new performance record and plans to significantly increase capital expenditure to $52-56 billion by 2026, far exceeding market expectations, with the aim of accelerating the expansion of advanced process capacity to address the ongoing global shortage of AI computing chips.
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Editor/Stephen, Joryn
