Capital expenditure at the four largest internet and software companies is set to total well over $200-billion this year.
Wall Street punished the world’s largest technology firms for spending enormous amounts to develop artificial intelligence, only to deliver results that failed to justify the costs.Capital expenditure of the four largest internet and software companies — Amazon.com, Microsoft, Meta Platforms and Google — is set to total well over US$200-billion this year, a record sum for the profligate collective.
They’re each trying to convince Wall Street that these huge investments will make their future businesses more profitable than the current ones selling digital ads, goods and software. Alphabet, Microsoft and Meta were all up slightly in pre-market trading on Friday, while Amazon rose 6.7% before New York exchanges opened. Apple declined in early trading by about 1.1%.For Microsoft, its lacklustre quarterly performance came not because customers weren’t lining up to pay for its cloud and AI offerings but because the company couldn’t build capacity quickly enough. “This demand all showed up pretty fast,” CEO Satya Nadella told investors in a call on Wednesday.
Wall Street’s concern with runaway spending isn’t going away. This week Meta reported $4.4-billion in operating losses for Reality Labs, its division that makes augmented reality glasses and other gadgets far from commercial success. The company has also spent heavily to make its Llama models that aim to compete with Google and OpenAI.
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