Tech titans’ spending spree: Are they going overboard?

Tech titans’ spending spree: Are they going overboard?

Big tech companies are going all out with their spending spree on data centers, chips, and AI models, totaling a whopping $200 billion this year. This surge in capital expenditure, up 45% from last year, has raised concerns about irrational exuberance in the tech industry.

Wall Street is predicting that these companies could collectively spend $1 trillion over the next five years, leading to increased revenues but also higher costs. The risks of runaway spending, commodification of AI models, and diminishing returns on investment loom large. Investors are cautious, especially after seeing past extravagant projects from tech giants like Meta. Will ever-bigger models pass the bang-for-the-buck test?

Source: https://www.economist.com/leaders/2024/05/16/big-techs-capex-splurge-may-be-irrationally-exuberant