Big Tech earnings season and the capex spiral
Big Tech companies are facing a 'capex spiral' as they invest heavily in AI data centers, with costs rising due to inflation and supply chain constraints. Analysts warn that increased spending does not necessarily equate to a proportional increase in AI capacity.
Why it matters
Understanding the economic dynamics of AI infrastructure is crucial for investors and industry observers tracking the sustainability of the current AI boom.
Google CEO Sundar Pichai Michael M. Santiago/Getty Images/Reuters A version of this story originally appeared in the BI Tech Memo newsletter. Sign up for the weekly BI Tech Memo newsletter here . Big Tech earnings season starts next week with Google , but the most important number won't be profit or revenue. It will be how much these companies say they'll spend on AI data centers . Google, Amazon, Microsoft, and Meta have already laid out plans to spend more than $700 billion this year . Investors know the companies are racing to add computing power. The harder question is how much extra capacity those dollars actually buy. The answer is getting worse. Memory chip prices have surged, while power equipment, construction materials, skilled workers, and electricity connections are all harder to secure.
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