Breaking Down the Tech Giants’ AI Spending Surge
Alphabet, Amazon, Meta and Microsoft are placing ever-bigger bets on the artificial intelligence boom. Execs say they are just getting started.
Big technology companies deepened their commitments to artificial-intelligence efforts in the latest quarter, pouring billions of dollars into capital-spending projects and telling investors more is on the way.
In earnings statements over the past two weeks, Amazon.com, Microsoft MSFT -2.07%decrease; red down pointing triangle, Facebook parent Meta Platforms and Google parent Alphabet GOOGL -2.40%decrease; red down pointing triangle each reported jumps in purchases of property and equipment, a measure of capital spending. For all but Meta META -1.93%decrease; red down pointing triangle, the latest quarterly figure was the highest in years.
The companies don’t disclose the share of outlays going toward AI-related initiatives, but executives tied the spending surge to investments in infrastructure required for developing the technology, such as data centers, servers and real estate. On calls with analysts, they also said the spending is expected to pay off over a number of years, and that the current risk is in investing too little in AI, rather than too much.
This isn’t the first time Big Tech has ramped up spending in an effort to get ahead. Amazon AMZN -8.78%decrease; red down pointing triangle invested heavily in its delivery network to meet demand during the Covid-19 pandemic, for example, though the company has recently shifted its spending focus from retail warehouses to data-center infrastructure.
Some companies said their capital spending was higher when you add expenses beyond the purchases of property and equipment. For example, Microsoft said that, including finance leases, its capital expenditures totaled $19 billion in its most recently completed quarter.
While the AI frenzy has helped send market values soaring for some of the largest players in the space, the stocks have turned lower recently following the large gains.
