Meta<\/a> acknowledged this week that capital expenditures will continue to rise as they rush to meet AI demand by building data center capacity.<\/p>\nShares of both companies fell on Wednesday, underscoring an inconvenient reality for AI-obsessed tech companies: tech companies have yet to turn generative AI into a meaningful revenue stream despite spending billions of dollars, making investors increasingly nervous.<\/p>\n
The problem is compounded by major supply constraints caused by chipmakers struggling to meet the insatiable appetites of large tech companies, and huge operating costs.<\/p>\n
\"The cost of running AI technology is high,\" GlobalData analyst Beatriz Valle told Reuters. \"The cost of getting capacity is high.\"<\/p>\n
\"It's become a race for capacity between the big tech companies,\" she added. \"It's going to take time to see the payoff and to see widespread adoption of the technology.\"<\/p>\n
The funding fireworks are likely to continue, at least for the near future, with Meta predicting a \"significant acceleration\" in AI-related infrastructure spending this week.<\/p>\n
The news has caused concern among analysts, and Meta's shares are down nearly 3% since the beginning of the week.<\/p>\n
Emarketer's chief analyst said, \"As AI costs rise next year, Meta will need to prove it can continue to cover its AI costs, and any weakness in its core advertising business could make investors nervous as they continue to wait for the payoff from Meta's bigger AI bets.\" Jasmine Enberg told Reuters.<\/p>\n
However, Meta CEO Mark Zuckerberg said it's all part of a long-term plan.<\/p>\n
\"In the short term, building infrastructure may not be what investors want to hear, but I think there's a really big opportunity here,\" Zuckerberg told investors on an earnings call on Wednesday, as quoted by Reuters. \"We're going to continue to invest heavily in that.\"<\/p>\n
Meanwhile, the companies that are really benefiting from the big increase in spending are cloud providers like Amazon and chipmaker Nvidia, the latter of which has cemented its position as the industry's leading source of AI chips.<\/p>","protected":false},"excerpt":{"rendered":"
The artificial intelligence industry is still struggling to reassure investors that the billions of dollars they're pouring into the technology are ultimately worth it. Microsoft and Meta acknowledged this week that capital expenditures will continue to rise as they rush to meet AI demand by building out data center capacity, Reuters reported. Shares of both companies fell on Wednesday, underscoring an inconvenient reality for AI-obsessed tech companies: tech companies have yet to turn generative AI into a meaningful revenue stream despite spending billions of dollars, making investors increasingly nervous. Major supply constraints due to chipmakers struggling to satisfy the insatiable appetites of large tech companies, as well as huge operating costs, compound the problem. GlobalData analyst Bea<\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[146],"tags":[297,986,585],"collection":[],"class_list":["post-22493","post","type-post","status-publish","format-standard","hentry","category-news","tag-meta","tag-microsoft","tag-585"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/posts\/22493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/comments?post=22493"}],"version-history":[{"count":0,"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/posts\/22493\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/media?parent=22493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/categories?post=22493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/tags?post=22493"},{"taxonomy":"collection","embeddable":true,"href":"https:\/\/www.1ai.net\/en\/wp-json\/wp\/v2\/collection?post=22493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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