Big Tech’s AI obsession costs $200 billion in 2024 and counting
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Three months back, Wall Street came down hard on Big Tech for its reckless AI spending spree. Billions poured into development with little return to show. Investors, unimpressed, hit back. The response from Silicon Valley? Spend even more. This year alone, the biggest tech firms (you know, Amazon, Microsoft, Meta, and Alphabet) will collectively burn over $200 billion on AI. And it’s only ramping up. Each CEO has made it clear: next year’s AI budget will be even higher. This relentless race isn’t cheap. Companies are scrambling to grab scarce, high-end chips and build massive data centers to fuel this tech. They’re striking deals with power suppliers to keep these centers online, even reopening a nuclear plant to support their AI ambitions. For these giants, the goal is to convince Wall Street that this investment will lead to more profits, replacing their current revenue streams from ads, digital products, and software. Amazon’s $75 billion bet on AI Amazon is leading the charge. CEO Andy Jassy called AI a “once-in-a-lifetime opportunity” and projects Amazon will spend a record $75 billion on it in 2024. “Our customers, the business, and our shareholders will feel good about this long term,” he claimed. Analysts at MoffettNathanson share this sentiment, calling Amazon’s spending “truly staggering.” Meta is right behind Amazon, with CEO Mark Zuckerberg pledging a major ramp-up in AI investments. Zuckerberg sees AI language models and related projects as critical to Meta’s future, pushing the company’s capital spending up to $40 billion this year. For Zuckerberg, these AI tools will improve Meta’s ad-based business on Facebook and Instagram. But the investors aren’t all convinced, especially with Reality Labs, Meta’s division for augmented reality, posting a $4.4 billion loss this week. Microsoft’s data center crunch and alphabet’s AI tack Microsoft faces its own set of…
Filed under: News - @ November 3, 2024 4:22 am