Who Gets the Bill
Wall Street is demanding more proof that Big Tech’s enormous spending on artificial intelligence will pay off, even as Amazon, Alphabet, Meta and Microsoft keep pouring hundreds of billions of dollars into the infrastructure behind the AI boom. The four companies are collectively set to surpass $700 billion in spending on AI this year, a race for dominance that leaves workers, users and everyone else living under the consequences of decisions made far above them.
Investors are now scrutinizing spending plans that do not have tangible results, a shift that has been building as spending on AI has skyrocketed in recent years. The pressure is not coming from the people whose lives are shaped by these systems, but from the market apparatus that wants proof the money machine is working fast enough.
The Winners and Losers of the Race
Wall Street last week got a look at the companies’ first-quarter earnings, and the market reaction showed exactly how quickly the hierarchy rewards and punishes. Alphabet shares jumped 10% after the company reported earnings, while Meta shares sank almost 9% after the company reported earnings. Microsoft shares dropped 4% and Amazon shares gained less than 1% Thursday after the companies reported earnings Wednesday.
Alphabet announced plans to raise its AI spending, but also showed an ability to monetize AI through ad revenue and demand for cloud contract services, with a backlog of deals valued at $460 billion, according to the company’s earnings results. Meta also announced plans to raise its spending on AI by at least another $10 billion, but Meta did not display the same evidence of it paying off. Meta does not have a cloud business like Alphabet or Microsoft, leaving it without that revenue stream.
What the Market Wants
Wall Street is now looking for clear AI winners and losers, rather than betting that the rising tide will lift all boats. Seema Shah, chief global strategist at Principal Asset Management, said in a note, “Looking ahead, careful selection in tech remains critical.” That is the language of selective backing, not shared benefit: capital wants the returns, and the rest can absorb the fallout.
Alphabet shares are up nearly 40% this year, making it the second most valuable company after Nvidia. Meta shares are down 7% this year. The onset of the war with Iran roiled global markets, but focus has now returned to AI as companies like Anthropic and OpenAI compete to develop superior models, tech companies continue to build out infrastructure and semiconductor chip stocks soar.
Alphabet, Amazon, Meta and Microsoft make up more than a fifth of the S&P 500’s market value, and Big Tech’s spending has been so large that it has boosted economic growth. Six months ago, concerns about an AI bubble dominated conversations about the market. Resurgent interest in AI has helped propel the S&P 500 to its best month since November 2020.
The AI story remains intact, investors say, but whether the major tech companies can get returns from their spending will dictate investors’ resolve. For the people outside the boardrooms and trading floors, the story is simpler: a handful of corporate giants are spending at historic scale, markets are rewarding or punishing them in real time, and the costs of that race are being pushed downward while the gains are measured upward.