Big Tech is pumping unprecedented amounts of money into AI: $650 billion on the table

Four of the largest technology companies in the world are jointly spending unprecedented amounts this year. Alphabet, Amazon, Meta and Microsoft jointly expect to invest around $650 billion in new data centers and AI infrastructure. This is an amount that has hardly occurred even during previous technology hypes.

The investments are intended to take the leading position in artificial intelligence. The stakes are high. According to the companies, whoever dominates now can rule for years in a market that is still developing.

AI race forces companies to spend at record levels

According to figures from Bloomberg, capital expenditures of these four tech giants are increasing by about sixty percent compared to a year earlier. Each individual company’s planned expenditures would set a record for the largest investment by a single company in a single year over the past decade.

Meta expects that investments could amount to $135 billion this year. Microsoft is not far below that with an estimated $105 billion. Alphabet surprised investors with a spending ceiling of $ 185 billion, while Amazon exceeds that with plans of up to $ 200 billion.

These announcements immediately caused unrest on the stock exchange. Shares of several companies took a big hit, despite the fact that their turnover and core activities are largely on track.

Data centers consume energy and raw materials

The money mainly goes to the construction of new data centers. It contains thousands of servers that run on powerful AI chips, often supplied by Nvidia and produced by Taiwan Semiconductor Manufacturing Company. These centers consume enormous amounts of electricity and water.

This leads to tensions in various regions. Local governments and residents are concerned about rising energy prices and competition for scarce resources. Economists also warn that the wave of investment from a small group of extremely profitable companies could distort the broader economic picture.

Analyst Gil Luria of DA Davidson calls the situation a classic winner-takes-it-all scenario. According to him, companies see computing power for AI as the next strategic power base. Nobody wants to be left behind.

Investors doubt the pace and returns

The big question is whether the enormous investments can be recouped quickly. Training advanced AI models is extremely expensive and requires thousands of chips that cost tens of thousands of dollars each. The companies expect that AI applications will soon have a permanent place in work, education and daily life.

Yet doubts are growing among investors. They wonder whether the returns are not too far in the future. Some investors fear that the AI ​​hype is ahead of actual demand, similar to previous investment bubbles in technology history.

At the same time, the character of the tech companies is visibly changing. Where in the past investments were mainly made in personnel and software, the focus is now shifting to physical infrastructure. Last year, Meta even spent more on buildings and equipment than on research and development.

Whether the AI ​​race will end in breakthrough or disappointment is still uncertain. What is certain: the scale and speed of these investments set the tone for the coming years in technology, financial markets and possibly also the crypto sector.