TLDR:
- Big Tech firms, including Amazon, Microsoft, Alphabet, Meta, and Apple, are expected to deploy over $200 billion in capex for AI this year.
- Investors are closely watching how these companies are investing in AI technology, with mixed reactions among different companies.
The race to build the computing power necessary for artificial intelligence has Big Tech spending like Big Oil, as described in an analyst note by Bernstein. The total spending from Amazon stock and its fellow Big Tech firms is likely to exceed the combined capex from the other 90 telecom and communications firms in the S&P 500, according to the analysts. A significant portion of this spending will focus on AI, including new data centers. Investors have been focused on generative AI for more than 18 months, with the scale of this investment cycle still surprising analysts.
Investors have reacted differently to each company’s investment plans. Google investors have backed the company to win in AI, while Meta’s investors are cautious due to recent PTSD over past investment cycles. Amazon and Microsoft have received lukewarm reactions, but see potential in monetizing through their cloud businesses. Apple, on the other hand, is effectively expensing much of its AI investment through its income statement, which is viewed as lower risk. Apple is expected to reveal more about its AI plans at its upcoming developers conference.
On the stock market today, Amazon stock is down, Microsoft and Apple are up, and Meta is holding steady. Overall, Big Tech’s massive investment in AI is drawing attention and speculation from investors, as they consider the potential impact on these tech giants’ growth and profitability.