Reported by The Verge AI
Amazon, Microsoft, Alphabet, and Meta are on the hook with their data center plans.
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After four of the biggest competitors in the AI race held quarterly earnings calls late last month, two things are clear: Big Tech is not done spending record amounts on the AI data center buildout, and the AI data center buildout is not any closer to yielding its promised returns.
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A third thing is also starting to become clear — Big Tech will not be slowing down, at least not on its own.
Amazon, Microsoft, Alphabet, and Meta told investors they’re planning to spend at least $720 billion on CapEx this year alone. Most of that will go toward AI infrastructure. That’s on top of at least $1 trillion in spending commitments that have been arranged for the coming years.
Big Tech’s spending plans officially spooked Wall Street and triggered a sharp selloff in tech stocks last week that began to taper off as investors shifted focus to Tuesday’s midterm elections. Those spending plans could change after voters across the country elected candidates who favor moratoriums and other restrictions on data centers.
Wall Street might see the new uncertainty around the future of data center regulation as a good thing, given that tech stocks began to rise again on Tuesday. After all, there’s another issue Big Tech companies have to address. Despite enormous amounts of spending, they haven’t really made money from AI yet, and they’re continuing to double down on it anyway.
Until now, investors haven’t really blinked as Big Tech has ramped up its spending to fund the AI buildout. But more than three years in, Wall Street is starting to get antsy about the promised payoff of AI — and exactly when they might expect to see a return on investment.
It’s not that top-line revenue isn’t growing — it very much is. Amazon reported its fastest growth in five years for the quarter, Meta’s ad revenue is surging, and Google Cloud’s revenue more than doubled in…