The four largest technology companies in the world — Alphabet, Meta, Microsoft, and Amazon — are preparing for an unprecedented expansion of their infrastructure. According to Bloomberg, in the coming years, these giants plan to invest nearly $2.4 trillion in developing artificial intelligence capabilities. These funds will be used to build data centers, purchase equipment, ensure energy supply, and lease facilities.

Record Commitments and Rising Costs

Companies attribute such massive investments to the colossal demand for computing power. Commitments include both short-term expenses and long-term contracts stretching decades into the future. This trend is particularly evident with Alphabet (Google's parent company). Last week, the holding company disclosed contract commitments totaling $902 billion that have not yet come into effect. This is more than nine times higher than the figures from a year ago. The sum includes agreements for equipment supply, energy provision, and leasing.

The situation is similar for Meta. The company's future investments amount to nearly $700 billion. Notably, about half of this sum is allocated to data center leasing, which has not yet begun but will be paid out over 30 years. Over the past year, Meta's total commitments have increased by more than eight times.

Market Reaction and 2025 Forecasts

Investors are reacting with concern to these figures. Last Thursday, Meta's stock faced criticism after the company released disappointing sales forecasts and raised its lower bound for annual capital expenditures to $130 billion (previously expected to be $125 billion). Amazon also increased its annual capex forecast to $220 billion from the previous $200 billion. Amazon President and CEO Andy Jassy stated that even this amount might be insufficient to meet the high demand.

Similar trends are observed among competitors:

  • Alphabet increased its spending forecast for the current year by $15 billion, bringing it to $205 billion.
  • Microsoft warned that the rapid rise in component prices would add another $25 billion to costs.
  • Microsoft CEO Satya Nadella reported that in the last quarter, the company opened 31 data centers across five continents. According to him, Microsoft is "on track to roughly double its total capacity in just two years".

Financing and Risks

From April to June, the capital expenditures of the four companies amounted to $170 billion, a 72% increase compared to the previous year. According to FactSet data, during this year and the next, Amazon, Google, Meta, and Microsoft are expected to spend $1.5 trillion on building data centers and equipping them with advanced chips.

To implement such ambitious plans, companies are increasingly resorting to borrowing. According to Nikkei Asia estimates, just five tech giants (Google, Microsoft, Amazon, Meta, and Oracle) have accumulated debt totaling about $3 trillion, including $1.65 trillion hidden off their balance sheets.

The main question troubling investors and analysts right now: will the hundreds of billions of dollars spent on AI infrastructure pay off, or will the market face an oversupply of capacity?