DeepSeek's technological innovation cannot stop the AI infrastructure frenzy: Bank of America expects investment in hyperscale data centers to soar by 34% in 2025
Bank of America Securities expects that capital expenditures for hyperscale data center operators will increase by 34% year-on-year in 2025, reaching $257 billion. Although DeepSeek's R1 model has impacted the U.S. stock AI sector, analysts point out that cloud computing companies will continue to increase investments to meet strong AI demand. Meta plans to raise $35 billion to build data centers, and Microsoft and Amazon are also ramping up their investments in AI infrastructure
According to the Zhitong Finance APP, despite the recent release of the R1 model by DeepSeek shaking the AI sector of the US stock market, Bank of America Securities still expects that capital expenditures for hyperscale data center operators will grow by 34% year-on-year in 2025, reaching $257 billion.
In an investor report on Monday, Bank of America analyst Justin Post stated, "In late January, DeepSeek reported that the development of its R1 model took only two months and cost less than $6 million, far below the investments of its US counterparts (investors are still debating the true cost of this distilled model)."
However, Post added, "It is expected that by 2025, cloud computing companies will still significantly increase capital expenditures, reflecting strong AI demand and existing capacity constraints. Additionally, management teams predict that cost reductions will release incremental demand."
For example, Amazon's Andy Jassy stated that due to chip supply constraints hindering data center construction, the demand for AI computing power is "never satisfied."
Post pointed out, "For generative AI investments, 2025 may not be the 'peak year,' as 'smart companies' will continue to invest in the most impactful generative AI programs, while 'dull companies' may feel 'disappointed' by the iterative nature of building generative AI models."
According to recent reports, Meta is in talks with Apollo Global to lead a $35 billion financing round to build data center infrastructure in the United States. CEO Mark Zuckerberg is transforming the social media giant into a powerhouse in the AI field, planning to invest $60 to $65 billion in AI infrastructure, a plan announced in January through a Facebook post.
Additionally, Microsoft stated it will invest $80 billion in AI data centers this year, while Amazon has committed $100 billion, and Google has pledged $75 billion