Microsoft, Meta and Alphabet recently reported their quarterly earnings and one thing is certain: the jaw-dropping investments in artificial intelligence are only just getting started. This all comes just days after Nvidia became the world's first-ever $5 trillion company.

California

Meta's stock price declined by more than 10% after CEO Mark Zuckerberg announced a commitment to raise the company's artificial intelligence spending to $70 billion for the year. This move, while reflecting the broader trend of major tech companies investing heavily in AI, has raised concerns among investors about the lack of clear short-term returns, especially given Meta's reliance on advertising revenue.

Other tech giants, including Microsoft and Alphabet, have also announced substantial AI investments, but their diversified revenue streams make such spending less risky. The report also highlights competitive pressures from Chinese companies developing AI solutions at lower costs, adding to the urgency and uncertainty surrounding these large-scale investments.

Meta stock falls over 10% after commitment to raise AI spending

three of the nation's biggest tech giants just reported quarterly earnings. And one thing is certain, the jaw dropping investments in artificial intelligence are only just getting started. Microsoft reporting a nearly $35 billion A. I. Spending spree last quarter alone. Metta committing to spend $70 billion on A. I. This year, an alphabet vowing to shell out more than $90 billion for its A. I. Agenda. Now, this all comes just days after NVIDIA became the world's first ever $5 trillion company, with CEO Jensen Wong forecasting an additional $500 billion in sales of just its A. I. Chips. Let's bring in Jacob Ward, a technology journalist, host of the Rip Current podcast and the author of the loop. How technology is creating a world without choices and how to fight back. Jacob, great to be with you. Thanks for having me. All right. These companies are betting big that the idea of A. I. Is going to continue to grow. But are investors convinced? I mean, is this a bubble? I mean, this is the problem, right? Is that big isn't even the word, right? It is such an incredible amount of money being spent on this. Like, like, take, for instance, the amount of money that a company like Microsoft is blowing, right? $35 billion in a single quarter, and it's not at all clear how that money is going to come back. And that has, of course, some investors excited and making some big bets. And in other cases, it's making them very nervous, as with meta, as we saw today. Yeah, it's interesting because shares of meta fell more than 10% after CEO Mark Zuckerberg promised to aggressively raise I. I. Spending. But tell us about the concerns about this company in particular. Well, so the thing is, right, we equate meta with all the others in terms of the money they make. But in fact, meta makes about $170 billion a year and, you know, 98% of that is ads against social media. They do one thing, and they do it really well, but they only do that one thing. So then, if you're gonna spend $70 billion, that's about 35 to 40%. My math is not great. 35 to 40% of that total revenue on this investment that shows no clear signs of paying off other than maybe it could make your ads better. Well, what are you doing, right? So that's why investors, I think, are very nervous. Whereas Google, if you look at them alphabet, right, is gonna make $350 billion in a single year so they can afford to blow 90 billion, not least because they're making about 45 billion a year on infrastructure on cloud computing. So they have a way of making that money back, and that's not at all clear to investors that that's true with meta. Another headline we're following deep seek, showing us that China can build a I chat bots that perform the same as American companies do, but cheaper. This is key. Do you think the U. S. Could the tech giants could find more ways to do more with less? It's always a challenge. And if they do, what happens to all that money that they've asked for? Well, this is the thing, right? Everyone needs to get their money back, right? This is the thing that the market is gonna want its money back. The investors are gonna want their money back. So all these companies are under incredible pressure. Now, deep seek was a really interesting thing that sent shockwaves through Silicon Valley because they turned out to be able to train a I so much more cheaply than these other big companies have. But when no one has able has been able to figure out is how to actually do the work more cheaply, right? So when you ask a I to do something for you to make a funny video or write a knock knock joke, you are asking all these computers to turn on in this data center somewhere. All of that is still super expensive. Deep seek did not solve that problem. So the thing is, right? We're in this clear bubble. It's got to be a bubble, right? And video alone worth $5 trillion, the first company to ever be worth that amount of money. If even a trillion of that comes off of their total value, who knows what that's gonna do the economy? I mean, the whole point of this is investors are pouring money into this, and eventually they're gonna want their money back, and it's not at all clear when that's gonna happen. Absolutely. You're trying to invest in the future and also trying to do more with less of which is the ethos of every company, no matter how successful. Yep. Jacob Ward. Great to see you. Thanks for being here. Thanks a lot.

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