Microsoft disclosed that its cash capital expenditures and equipment expenditures reached $19 billion in the quarter ended June, equivalent to full-year expenditures five years ago. Most of this spending is AI-related, and half of it is used to build and lease data centers. A similar situation is true for Google, which significantly increased its spending on AI infrastructure in the first half of the year and expects to spend as much as $49 billion by the end of the year.
But investments in AI will not pay back, at least in the short term, and Microsoft Chief Financial Officer Amy Hood said the company predicts that these investments may take 15 years or more to monetize. The comment worried analysts.
Goldman Sachs senior analyst Jim Covello pointed out last month that AI is far from reaching a practical level. While technology giants insist that AI is a long-term investment, Wall Street analysts are increasingly cautious about losses. OpenAI is believed to run out of cash in the next 12 months without a huge capital injection.
Despite investors ‘concerns about slow returns on investment, major technology companies such as Meta, Alphabet, Microsoft and Amazon are actively increasing their investment in artificial intelligence (AI). In the most recent quarter alone, these companies ‘total expenditures on capital expenditures reached $59 billion, a year-on-year increase of 63%. This surge is driven by the development of generative AI, which is expected to revolutionize industries.
While AI sales are currently negligible, technology leaders believe the potential for long-term growth justifies huge investments. Meta CEO Mark Zuckerberg said that investing too little in AI is now more risky than investing too much. Similarly, Alphabet CEO Sandar Pichai also emphasized the importance of patience, saying that “the risk of underinvestment is far greater than the risk of overinvestment.”
Although some have expressed concerns about the financial viability of AI, the industry is experiencing a chip shortage, indicating that AI development continues to prosper. While the direct financial impact of AI is unclear, technology giants are betting on its transformative potential.
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Original text:https://futurism.com/the-byte/microsoft-losing-money-ai
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