The largest technology companies significantly increased their capital expenditures this year, totaling more than $100 billion, up 50% from the previous year. The decision stems from the need to build infrastructure to develop artificial intelligence, despite growing skepticism among Wall Street investors about the return on such investments.
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According to a Financial Times report, companies such as Microsoft, Alphabet, Amazon and Meta✴ spent a total of $106 billion in the first six months of 2024. The leaders of these companies, ignoring stock market concerns, plan for further investment growth over the next 18 months.
Mark Zuckerberg, head of Meta✴, said: “At this point, I would rather take the risk and add capacity before it might be needed so that it is not too late.” He predicts Facebook✴’s capital spending could reach $40 billion this year.
Earnings news from leading technology companies (Big Tech) coincided with a general decline in optimism on Wall Street. The Nasdaq entered a correction on Friday amid weak employment figures in the US. Shares of semiconductor makers, including AI chip leader Nvidia, were particularly volatile this week as investors became more sensitive to big tech announcements about spending plans. And Intel lost more than a quarter (26%) of its market value after announcing large-scale staff cuts.