Silicon Valley’s AI Spend Goes Berserk as Microsoft Starts Cashing In

Meta, Apple, Microsoft and Amazon all told quarterly earnings this week and had a simple thread to tie them together: an incentive of AI expenses and planning to increase it beyond the expectations of analysts.

Although the capital expenditures of the above expectations are often not especially happy, this week it had a very opposite effect, especially for Meta and Microsoft, both saw a pop in their stock after being released.

And for Microsoft, which has posted it Forecast for the largest quarterly capital expenditure of all timeThe share enthusiasm turned the tech giant to the second time the $ 4 trillion dollar market evaluation, when it briefly violated the threshold on Thursday.

This step was basically because both Meta and Microsoft finally earned their investment.

The huge amount of money -making Meta advertising for the technology giant, the last quarter, came a few billion dollars than the expectation of Wall Street, and CEO Mark Zuckerberg blamed the artificial intelligence on the AD system. Zuckerberg assured investors that this surprise of the revenue continued to increase, he said that his Many billion dollars Investment in the formation of a team dedicated to “Superinteligent” AI will lead to more payment for his advertising business.

Microsoft Report This sales increased by 18% over the past year and its cloud computing platform Azur’s earnings exceeded $ 75 billion in this fiscal year, which was 34% higher than last year. Revenue from the company’s productivity and business process departments has also exceeded the expectations and company officials shared that the sale of business software Microsoft 365 Kapilot was partially thanked for extensive acceptance.

All the news combines a question: Silicon Valley’s AI bet has finally started to pay?

AI expense boom

Zuckerberg admits that Meta is in the midst of many million dollars of AI Push after admitting that the company is behind the competitors in AI race. The push high profile has been characterized by strategic talent rentals and especially Poaching OpenAI employees are tempted by several years of deals worth several million dollars.

In the meantime, the company is also running in data centers. Zuckerberg said last month that Meta would invest AI Data Center a few hundred billion dollarsThe The first of the company will be unveiled next year between multiple multi-gigawat data centers and Zuckerberg said in one of his posts Thread One of these data centers is “only a significant part of the manhattan footprint.”

This week, Meta says it is expected to shell out between $ 66 billion and $ 72 billion this year and it is expected to spend more than the next year for the data center and appointment.

Microsoft, on the other hand, says it is expected to spend more than $ 1 billion the next year, most of which is moving towards AI. In this upcoming quarter, the company is focusing on $ 30 billion at capital expenses, and for most AIs, which forecasts the company’s record.

Apple posted better than the expected revenue of his earnings this week, but it was mostly responsible for the sale of the iPhone. Nevertheless, CEO Tim Cook told investors when calling for company earnings that Tech Giants are planning “plan”Significantly“Increase his investments in AI to contact the rivals and is open to acquisition to do so.

AI demand is finally being caught?

One of the biggest concerns in the case of AI is related to the cost. Although Silicon Valley is ing in countless dollars – only this year is $ 300 billion, according to its number Financial Times– Not everyone believes that AI’s demand will scale accordingly. And if it doesn’t happen, it will cause a big problem for the industry.

A Paper Published early last month, the Federal Reserve claimed that the biggest challenge with the generator AI was not the possibility of technology itself, but to use it in reality of people and traders. The technology is not necessarily adopted outside the technology, science and finance fields and is mostly deployed by large companies.

As the technology is better, the demand for AI is also bound to increase, but exactly how mystery is. If that demand does not increase as expected, the Fed paper warns, “catastrophic consequences”, much like over the 1800s railroad and then economic disappointment.

The answer to whether AI’s demand will scale up to the level of investment is still a specific yes or no, but this income has given enough dose to the AI Bulls.

However, there is still the risk of overspanding, because the technology giants have continued to promise investment: if investment does not clearly increase the demand and revenue clearly, especially for the main business of the organization, but there is still the possibility of “catastrophic consequences”.