New York (CNN) — If there’s one factor the White Home, Wall Avenue and Silicon Valley can agree on, it’s that synthetic intelligence is a prime precedence.
Tech giants are pouring billions into new information facilities and infrastructure to assist the expertise. The White Home got here out with an AI motion plan in July to spice up America’s management within the area, underscoring the tech’s significance to the administration. Wall Avenue retains pushing AI-related shares like Nvidia (NVDA) to new data.
However President Donald Trump’s commerce battle has raised questions on whether or not the administration’s insurance policies might work in opposition to its massive AI push. Sure tariffs might increase the prices of supplies and parts essential to assist these AI fashions.
For instance, the president stated on August 6 that he would subject a 100% tariff on semiconductors imports, though he added that firms which have dedicated to increasing their manufacturing operations within the US could be exempt. (He didn’t give an actual timeline for when these tariffs would begin.) And in late July, he imposed a 50% tariff on copper, which is utilized in digital parts akin to printed circuit boards and chips.
However whereas tariffs might stoke uncertainty round prices, consultants say they gained’t sluggish technological developments, primarily as a result of the stakes are just too excessive to fall behind within the international AI race.
For giant tech firms like Meta and Microsoft, dropping in AI could be the next value to pay than any extra prices from tariffs. Dallas Dolen, the US expertise, media and telecommunications lead for PricewaterhouseCoopers, stated most of these firms probably view the AI increase as an “existential moment” for his or her companies.
“Cost, if you have enough money, is not the most important variable that you take into account when you’re told it’s an existential threat,” he stated to CNN.
Huge Tech is pouring billions into AI
When Meta, Microsoft and Google reported earnings in late July, one message rang loud and clear: Huge Tech is spending massive on AI, and it’s beginning to repay.
Meta spent $17 billion in capital expenditures for the quarter that led to June, and it noticed its earnings per share go up 38% in comparison with a yr in the past. Capital expenditures usually seek advice from cash spent on issues like information facilities and infrastructure, probably an indication that Meta is investing extra within the servers wanted to energy its burgeoning AI companies.
Wall Avenue cheered the outcomes; Meta shares (META) rose 9% in after-hours buying and selling when it posted the outcomes on July 30, and shares are up roughly 30% yr so far.
Microsoft (MSFT) additionally posted robust outcomes due to its cloud computing enterprise. It spent $24.2 billion in capital expenditures throughout its most up-to-date quarter, and it plans to spend one other $30 billion within the coming months, the corporate stated in late July. Microsoft turned the second firm to succeed in a $4 trillion valuation final month, following Nvidia, and its shares are up about 26% thus far this yr.
And Google father or mother Alphabet elevated its capital expenditures for 2025 to $85 billion due to demand for its cloud merchandise. The corporate stated its cloud companies are utilized by “nearly all gen AI unicorns,” referring to privately held firms price $1 billion or extra within the generative synthetic intelligence area. Alphabet shares (GOOG) are up almost 7% yr so far.
That extra infrastructure could also be important; Goldman Sachs estimates that international energy demand from information facilities will surge 50% by 2027 and 165% by 2030 in comparison with 2023 due to AI.
“We have barely scratched the surface of this 4th Industrial Revolution now playing out around the world led by the Big Tech stalwarts such as Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon,” Wedbush Securities analyst Dan Ives stated in a analysis notice following the businesses’ earnings outcomes.
How tariffs might influence the AI push
Trump’s quickly altering tariff insurance policies have made it troublesome to estimate how precisely the levies might influence the price of constructing and working information facilities.
However PwC’s Dolen stated he’s seen estimates indicating that tariffs might enhance building prices by 5% to 7%. The Nationwide Affiliation of Producers’ outlook survey additionally discovered that commerce uncertainties and elevated prices of uncooked supplies have been the highest enterprise challenges for producers within the first quarter of 2025.
Nevertheless, massive tech firms are more likely to eat any extra prices associated to AI infrastructure as a result of “demand is so strong,” stated Michelle Brophy, director of analysis for tech, media and telecom at market intelligence agency AlphaSense.
It’s a distinct story for smaller firms that don’t have billions to spend every quarter. Additionally they usually have personal traders demanding a quick return on funding, and information facilities are long-term bets that might take years to indicate worth in a significant approach.
Between 2015 and 2020, it took one to 3 years on common to assemble a knowledge heart, in line with industrial actual property companies agency CBRE. And a knowledge heart is helpful for 25 years to 30 years on common, McKinsey & Firm senior companion Pankaj Sachdeva stated in October 2024.
As a result of information facilities are long-term tasks, “the degree of uncertainty will have a larger impact in terms of, you know, committing to something that will take multiple years to execute,” stated Laurence Ales, a professor of economics at Carnegie Mellon College.
It’s additionally unclear whether or not Trump’s semiconductor tariffs will increase the price of future information facilities. The president stated firms which have “committed” to constructing within the US gained’t should pay a levy on semiconductors.
Trump didn’t specify which firms could be exempt, however chipmaking giants Nvidia and TSMC have each stated they might broaden their US operations.
Specialists consider extra collaboration between the White Home and Silicon Valley is more likely to come, presumably easing any potential tariff-induced prices for tech giants. Trump confirmed his willingness to barter with tech leaders earlier this week: He allowed Nvidia and AMD to promote their AI chips to China so long as they supply a 15% minimize to the US authorities in alternate for export licenses. And the White Home is reportedly discussing taking a stake in chipmaker Intel.
Constructing AI infrastructure is a key a part of the White Home’s AI motion plan, which incorporates coverage suggestions for streamlining permits for amenities like information facilities and semiconductor manufacturing amenities.
America already has extra information facilities than every other nation, in line with information from Cloudscene, a platform that connects companies with cloud companies, compiled by Statista. Most of the world’s largest cloud suppliers, like Microsoft and Amazon, are American firms.
“We need to be mindful that this is an area in which we have an advantage,” Matt Pearl, director of the strategic applied sciences program on the Heart for Worldwide and Strategic Research, stated to CNN. “And we don’t want to give that up.”
Initially Printed: August 18, 2025 at 9:47 AM PDT
