- AI investment accelerated in 2025, with global venture funding topping US$202B (+75% YoY) and Big Tech AI-infrastructure capex estimated above US$300B.
- Microsoft showed early ROI, with Azure surpassing US$75B in annual revenue (+34% YoY) and AI contributing meaningfully to Intelligent Cloud growth.
- Funding is concentrating in foundation-model labs (~40% of AI startup capital) and in the U.S. (~79% of global AI VC), reinforcing scale advantages.
- Key risks include uncertain long-term returns, rising capex and supply constraints, potential overcapacity, and valuation pressure on smaller players.
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The RSM article titled “Tech continues to bet on AI’s future with big investments” highlights a broad belief that recent AI investment is the beginning of a structural, long-term transformation. It supports this view with evidence that big tech companies are already realizing tangible returns on investment — for example, Microsoft’s Intelligent Cloud segment (Azure and related cloud services) grew 33% in the third fiscal quarter of FY 2025, of which approximately 16 percentage points came from AI services.
Corroborating sources reveal that in 2025: total venture funding in AI reached over US$202 billion, up from about US$114 billion in 2024 — a >75% increase. Foundation model labs accounted for about 40% of that funding. Global corporate capex by Big Tech for AI infrastructure (estimates exceed US$300 billion) underscores that the investment is deep, not just speculative.
Microsoft is one of the central actors in this ecosystem. In Q4 FY 2025, Microsoft reported US$76.4 billion in revenue (up 18% YoY), with Azure standalone annual revenue exceeding US$75 billion (up 34%) for the first time. Azure grew 39% YoY in revenue in the quarter, driven by “growth across all workloads” including strong AI demand. The company also expanded its data center footprint to over 400 facilities across 70 regions.
Strategic implications include: large firms with scale are gaining a competitive moat via infrastructure and partner network effects; foundation model labs require immense capital, fueling concentration at the top; while data center and AI hardware demand is pushing supply constraints and margin pressure. Meanwhile, high valuation smaller firms face scrutiny, and ROI uncertainty is rising for late-stage investors.
Open questions going forward include: how will regulation (data, AI safety, antitrust) influence competitive dynamics; will infrastructure spending lead to overcapacity; what are the viable business models for AI beyond cloud + foundation models; and to what extent will AI’s productivity gains offset the rising capital and operational costs?
Supporting Notes
- Microsoft’s Intelligent Cloud revenue rose 33% year-over-year in Q3 FY 2025, with AI services contributing 16 percentage points of that growth.
- Azure annual revenue surpassed US$75 billion in fiscal year 2025, up about 34% over the previous year.
- Global AI venture funding in 2025 exceeded US$202 billion, up from US$114 billion in 2024 — a year-over-year increase of 75%.
- Foundation model labs raised ~US$80 billion in 2025, representing around 40% of global AI startup funding.
- US-based AI companies captured about 79% of global venture funding in 2025, with over three-quarters of that flowing to the San Francisco Bay Area.
- Big Tech capex for AI infrastructure in 2025 is estimated at over US$300 billion, with Amazon, Microsoft, Alphabet, and Meta as leading contributors.
- SoftBank finalized a US$40 billion investment in OpenAI in December 2025 as part of a broader gamble on AI and infrastructure like data centers.