May 09, 2025

Tariffs and Tech: An Uncertain Recipe

By: Pablo Chavez

The most recent quarterly earnings results of Alphabet, Amazon, Meta, and Microsoft offer insights into how the Trump administration’s tariffs might affect tech companies’ capital expenditures on data centers and other infrastructure that supports their AI efforts. For now, the impact appears minimal, but in the medium and long term, US tariffs could have significant effects on companies’ artificial intelligence-related investments.

The four companies are still making enormous outlays. Together, they reported capital expenditures of almost $77 billion for the quarter. For context, that’s more than the US government spends annually on highways and bridges and more than three times NASA’s annual budget.

Higher tariffs could prompt American cloud companies to shift more of their capital investments abroad.

  • Alphabet invested about $17.2 billion. Servers represented the largest share of that investment, followed by data center expansion. Alphabet is also spending on specialized AI chips and subsea cables. This investment was about a 20% increase over the previous quarter ($14.3 billion) and an almost 80% increase year-over-year (Q1 2024 was about $9.6 billion).
  • Amazon spent $24.3 billion in the quarter, most on AWS cloud infrastructure and developing AWS’s Trainium specialized AI chips. This represented a slight decrease—7.6%—from the previous quarter’s investment but a significant increase of 74% year over year.

Read the full article on CEPA.

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