Big tech’s heavy AI spending triggers investors’ concerns
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Investors’ concerns are growing over artificial intelligence spending by the US tech giants. A Goldman Sachs report provides a glimpse of investors’ worries regarding profitability from heavy AI spending. Also read: US proposes new rule to curb AI investments in China Hyperscale tech companies have spent nearly $357 billion on capital expenditures and research and development, especially in AI, during the past year, according to the strategist’s team led by Ryan Hammond. According to a Bloomberg report, Meta Platforms Inc., Alphabet Inc., Amazon.com Inc., and Microsoft Crop are considered hyperscale tech firms by strategists. Big tech firms will soon cross the $1 trillion mark in AI spending A significant portion of the multibillion-dollar spending is in the AI sector. This spending is so big that it equals almost a quarter of the S&P 500 total for research and development and Capital expenditures. Goldman Sachs analysts are skeptical of the time frame that most AI advocates claim, as they think it might take longer than expected for the cloud service providers’ investments to pay off. Some even question the global expectations from the AI revolution, such as Jim Cavello, global head of equity at Goldman Sachs. He expressed his doubts about the technology, raising questions about the scale of its influence and profitability. Cavello said, “Many people seem to believe that AI will be the most important technological invention of their lifetime, but I don’t agree given the extent to which the internet, cellphones, and laptops have fundamentally transformed our daily lives,” Cavello continued, saying that all these technologies have already enabled us to do things that were not possible previously, like making calls, online shopping, and computing. He also estimated that AI expenditures by big tech will reach the $1 trillion mark over the next few years. The bank’s equity…
Filed under: News - @ July 11, 2024 7:10 pm