Tech Giants Expected to Ramp Up AI Spending Spree After DeepSeek

Hyperscalers are set to push AI data center spending past $500 billion by 2032, driven by new reasoning models from OpenAI and DeepSeek.

(Bloomberg) -- The biggest tech firms will ramp up their combined annual spending on artificial intelligence to more than $500 billion by early next decade, driven in part by a newer approach to AI from DeepSeek and OpenAI, according to Bloomberg Intelligence.

A group of so-called hyperscale companies, including Microsoft, Amazon, and Meta Platforms, are projected to spend $371 billion on data centers and computing resources for AI in 2025, a 44% increase from the year prior, according to a report published Monday. That amount is set to rise to $525 billion by 2032, growing at a faster clip than Bloomberg Intelligence expected before the viral success of DeepSeek.

Until recently, much of the investment in artificial intelligence has gone to data centers and chips that are used to train, or develop, massive new AI models. Now, tech firms are expected to move more spending to inference, or the process of running those systems after they’ve been trained.

The shift in investment has been accelerated by the release of new reasoning models from OpenAI and China’s DeepSeek, among other companies, the report said. These systems take more time to compute responses to user queries, mimicking the process of how humans think through problems.

The rise of DeepSeek, which claimed to develop a competitive model for a fraction of the cost of some leading US rivals, prompted questions in the US tech industry over heavy investments in developing AI. Some leading AI companies are now embracing more efficient AI systems that can run on fewer chops.

But reasoning models also offer new opportunities to make money from software, according to the report, and potentially transfer more of the cost from the development stage to after the model is rolled out. That’s likely to drive greater investment in this approach, and boost spending on AI overall, the report said.

“Capital spending growth for AI training could be much slower than our prior expectations,” Mandeep Singh, an analyst with Bloomberg Intelligence, wrote in the report. But the immense amount of attention on DeepSeek, he wrote, will likely push tech firms to “increase investments” in inference, making it the fastest-growing segment in the generative AI market.

While training-related spending is expected to make up more than 40% of hyperscalers’ AI budgets this year, that segment is expected to drop to just 14% by 2032, according to the report. By contrast, inference-driven investments could make up nearly half of all AI spending that year.

Alphabet’s Google appears best positioned to make this pivot quickly, thanks to its in-house chips that handle both training and inferencing, Singh writes. Other companies, such as Microsoft and Meta, have leaned heavily on Nvidia Corp. chips and might not have as much flexibility.

Hyperscalers are set to push AI data center spending past $500 billion by 2032, driven by new reasoning models from OpenAI and DeepSeek.

Jackie Davalos, Bloomberg News