Amazon, Microsoft, Google and Meta have set a new spending record, projecting over $720 billion in data center and capital expenses this year—roughly triple what they spent two years ago. The AI boom drives this spending spree, with all four companies expected to spend even more next year. Investors are uneasy as most are spending more on data centers than they earn from their businesses, forcing them to take loans or sell stock for cash.
Google's stock fell over 12% after reporting underwhelming results, erasing annual gains. Amazon and Meta also saw share declines after reporting heavy capital expenditures. Free cash flow has turned negative for all but Microsoft, signaling they're betting heavily on AI returns that may take years to materialize.
Amazon reported $201.9 billion in sales, up 12%, but capital expenditures surpassed $75 billion, pushing free cash flow to negative $42.4 billion. "Slight differences are causing a lot of volatility," said David Tsui of S&P Global Ratings, warning of several more years of uncertainty as companies spend now and returns come later.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing