Three months ago, Wall Street punished the world’s largest technology firms for spending enormous amounts to develop artificial intelligence, only to deliver results that failed to justify the costs. Silicon Valley’s response this quarter? Plans to invest even more. 

The capital expenditures of the four largest internet and software companies - Amazon, Microsoft, Meta and Alphabet - are set to total well over $200 billion this year, a record sum for the profligate collective. Executives from each company warned investors this week that their splurge will continue next year, or even ramp up.

The spree underscores the extreme costs and resources consumed from the worldwide boom in AI ignited by the arrival of ChatGPT. Tech giants are racing to secure the scarce high-end chips and build the sprawling data centers the technology demands. To do so, the companies have cut deals with energy providers to power these facilities, even reviving a notorious nuclear plant. 

They’re each trying to convince Wall Street that these huge investments will make their future businesses more profitable than the current ones selling digital ads, goods and software.

On an investor call on Thursday, Andy Jassy, Amazon’s chief executive, called AI a “really unusually large, maybe once-in-a-lifetime type of opportunity,” evidenced by his company’s projection for a record $75 billion in spending for 2024. “I think our customers, the business, and our shareholders will feel good about this long term - that we’re aggressively pursuing it.” Analysts at MoffettNathanson called Amazon’s spending “truly staggering.” 

A day earlier, Meta CEO Mark Zuckerberg pledged to ramp up investing in AI language models and other futuristic projects he now frames as core to his company’s future. Meta’s capital spending may climb as high as $40 billion this year. Meanwhile, Alphabet’s capex budget came in higher than Wall Street expectations, and its CFO Anat Ashkenazi projected “substantial” increases in 2025.

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