Tech Giants to Pour Over $500B into AI by 2032

Artificial intelligence keeps attracting massive investments. The biggest tech firms, including Microsoft, Amazon, and Meta, are set to spend $371 billion on AI in 2025 – a 44% jump from 2024. By 2032, that number could skyrocket to $525 billion, according to Bloomberg Intelligence.

DeepSeek is a Chinese AI company developing advanced reasoning models. It claims to create competitive AI at a fraction of the cost of U.S. rivals, challenging industry giants like OpenAI.

Previously, most AI investments went into data centers and high-end chips used for model training. But now, the focus is shifting toward inference – the process of running AI models after they’ve been trained. This shift is largely due to the rise of reasoning models that take longer to compute answers but aim to mimic human-like thought processes.

OpenAI and China’s DeepSeek have been leading the charge with new models that don’t just spit out pre-learned responses but attempt to think through problems. These systems require more computing power but also introduce new ways to monetize AI, allowing companies to move costs from training to actual usage.

DeepSeek made waves when it claimed to have developed a competitive model for a fraction of the cost compared to major U.S. players. This has raised questions about whether current AI investments are as efficient as they should be. As a result, more AI firms are now prioritizing cost-effective models over sheer computational power.

Right now, AI training makes up over 40% of hyperscaler AI budgets, but that number is expected to drop to just 14% by 2032. Meanwhile, inference spending is projected to make up nearly half of all AI investments by then. This marks a major shift in how AI companies allocate their resources.

Google appears best positioned for this transition, thanks to its in-house chips that handle both training and inference efficiently. On the other hand, Microsoft and Meta still heavily rely on Nvidia, which might limit their flexibility moving forward.