DeepSeek technology innovation cannot stop the AI infrastructure craze: Bank of America predicts a 34% surge in investment in mega data centers by 2025.

08:19 04/03/2025

Although DeepSeek's recent release of the R1 model has shaken up the AI sector of the US stock market, Bank of America Securities still predicts that capital expenditures for hyper-scale data center operators will increase by 34% year-on-year in 2025, reaching $257 billion.

Although DeepSeek's recent release of its R1 model has shaken the US stock AI sector, Bank of America Corp Securities still predicts that capital expenditure for super-large-scale data center operators will increase by 34% year-on-year to reach $257 billion by 2025. Bank of America Corp analyst Justin Post stated in an investor report on Monday, "In late January, DeepSeek reported that the development of its R1 model took only two months and cost less than $6 million, far lower than the investment by US peers (investors are still debating the true cost of this distilled model)." However, Post added, "It is expected that by 2025, cloud computing companies will continue to significantly increase capital expenditures, reflecting strong AI demand and existing production capacity constraints. In addition, management teams predict that cost reductions will unleash incremental demand." For example, Amazon.com, Inc.'s Andy Jassy stated that the demand for AI computing power is "insatiable" due to chip supply constraints stifling data center construction. Post noted, "For investments in generative AI, 2025 may not be a 'peak year' as 'smart companies' will continue to invest in the most impactful generative AI initiatives, while 'sluggish companies' may be '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 for building data center infrastructure in the US. CEO Zuckerberg is transforming this social media giant into an AI powerhouse, with plans to invest $60-65 billion in building AI infrastructure, a plan announced via a Facebook post in January. Furthermore, Microsoft Corporation stated it will invest $80 billion in AI data centers this year, while Amazon.com, Inc. has committed to investing $100 billion and Alphabet Inc. Class C has committed to investing $75 billion.

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