AI arms race: Tech giants invest 650 billion US dollars this year
AI investments reach astronomical heights. More than half a trillion US dollars are to be invested in the technology by major US tech corporations this year.
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The arms race for AI supremacy is reaching epic proportions: Alphabet, Amazon, Meta, and Microsoft are planning to spend a total of 650 billion US dollars on AI infrastructure this year. These capital expenditures are recorded by the corporations as Capital Expenditures (Capex) summed up in their annual financial reports.
The level of capital offensive is so high that Bloomberg draws parallels to historical events such as the expansion of the US railway network in the 19th century or the New Deal era aid programs. The business magazine forecasts that the corporations could invest as much in AI this year alone as in the last three years combined – or even more.
Microsoft and Meta account for around 105 billion and 135 billion US dollars respectively, while Google's parent company Alphabet plans investments of up to 185 billion US dollars. The record holder is Amazon with announced 200 billion US dollars in projected spending. These figures represent the respective maximum amounts.
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Between Gold Rush and Stock Market Tremors
In view of the investment spiral and concerns about an AI bubble, the share prices of the tech giants have slumped. Combined, their stock market value has fallen by 640 billion US dollars after the announcements, according to Bloomberg. A sum that almost exactly matches the planned expenditures.
The majority of these funds are flowing into data centers, which are intended to drive the next generation of AI services. Behind the capital offensive is the hope that large language models will play a central role in everyday and professional life in the future. However, the nervousness on the stock market reveals considerable doubts: many observers are skeptical whether and within what timeframe the immense investments of the corporations will become a profitable reality.
Meanwhile, the massive infrastructure projects are having a negative impact on other industries: as the tech giants buy up essential hardware components for their data centers or prefer to produce AI accelerators instead of graphics cards, this development leads to bottlenecks, which are reflected in higher memory prices and product delays for consumer electronics.
(mma)
