Big tech companies are planning to spend a whopping $200 billion this year on artificial intelligence (AI) (Reported by Bloomberg Law). They want to show investors that this money will help them make more profit in the future than their current businesses, which mainly sell digital ads, products, and software.
Just three months ago, Wall Street was not impressed with these tech giants when they invested heavily in AI but didn’t deliver results that justified the high costs. Surprisingly, instead of pulling back, these companies are now planning to spend even more.
The four biggest companies—Amazon, Microsoft, Meta, and Alphabet—are expected to have record-breaking capital expenses this year. Together, they’re set to spend more than $200 billion. Their leaders warned investors that spending will not only continue next year but may actually increase.
This spending spree highlights how expensive it is to keep up with the global demand for AI, especially after ChatGPT became popular. These tech companies are racing to get powerful computer chips and build large data centers to support AI technology.
They’ve even made deals with energy companies to ensure these facilities have enough power, reviving a controversial nuclear power plant in the process.
During an investor call, Amazon’s CEO, Andy Jassy, described AI as a once-in-a-lifetime opportunity. He believes this investment will benefit customers, the business, and shareholders in the long run. Amazon plans to spend a record $75 billion on AI in 2024. Analysts have called Amazon’s spending “truly staggering.”
Similarly, Meta’s CEO, Mark Zuckerberg, said the company will invest heavily in AI language models and other future projects, which he now sees as essential to Meta’s future.
Meta’s spending may reach up to $40 billion this year. Alphabet also surprised Wall Street with a higher-than-expected budget and plans for substantial increases in spending through 2025.