Like us going to a fancy restaurant and leaving hungry, tech investors are wondering if they’ve spent a little too much on AI without getting their fill.
Driving the news: Microsoft releases its quarterly earnings today, and all investor eyes are locked on the performance of Azure, the company’s cloud computing division. Shareholders expect robust revenues after Microsoft sank billions into Azure’s data centres and AI infrastructure.
- Microsoft's capital spending is projected to have surged a whopping ~53% year over year last quarter, per analyst estimates collected by LSEG.
Why it matters: Companies have poured countless billions into AI, and investors are antsy for money-making use cases that will offer returns on their investments. AI might create new industries one day, but right now, there’s worry it could be a resource-intensive bubble.
- Major institutions including Goldman Sachs and Sequoia have published reports recently calling into question both the short- and long-term financial viability of AI investments.
Yes, but: If you ask AI true believers about the money, they’ll tell you there’s no such thing as over-investing, as the real great risk is falling behind. To quote OpenAI CEO Sam Altman, “Whether we burn $500 million a year, or $5 billion, or $50 billion a year, I don’t care.”—QH