When investment on the scale of the current AI boom occurs, it inevitably has to come at the expense of something. All the resources devoted to building data centers and developing AI models would otherwise go to something else. The big picture: This crowding out is smaller than you might expect, Goldman Sachs economists find in a new note. - But it does exist, they say, and takes the form of displacing other tech investment and construction , as well as raising corporate borrowing costs. By the numbers: AI investment will be about $600 billion this year, some 2% of GDP, accounting for 10% of business fixed investment and 15% of equipment investment, economists Jessica Rindels and David Mericle wrote. State of play: The first…
AI:Goldman Sachs economists report that the massive influx of capital into AI infrastructure, projected to reach $600 billion this year, is causing a "crowding-out" effect by displacing other areas of economic activity. This shift manifests as reduced spending on non-AI software and tech services, redirected construction labor and equipment toward high-margin data center projects, and increased corporate borrowing costs due to surges in AI-related debt issuance. While these trends divert resources from traditional manufacturing, construction, and general IT budgets, analysts suggest the actual impact on overall GDP remains relatively modest rather than the catastrophic displacement often suggested by market commentary.Open
Amazon joined a procession of tech giants that ramped up their spending on artificial intelligence, as its capital expenditures soared 69 percent. Concerns over the industry’s spending are mounting.
Meta CEO Mark Zuckerberg on Thursday laid out an optimistic view of the agentic future , arguing the company's focus on connecting the world will only be strengthened with new AI tools and technologies. Why it matters: His position is framed as a stark contrast to some of Meta's AI competitors, who — according to a video ad posted with Zuckerberg's comments — promote fear and a dystopian vision of the future. - "Some people will have you believe AI will make us less connected, that it's going to leave us behind. We couldn't disagree more. Call us optimists, call us dreamers. Just as we've always done we're betting on people," the ad notes. Zoom in: In a Facebook post, Zuckerberg said "Meta has always believed in giving people the…
The company reported a strong holiday quarter on Thursday. But its big spending on things like artificial intelligence and satellites is starting to make investors nervous.
Meta CEO Mark Zuckerberg said 2026 will be the year "AI starts to dramatically change the way that we work," as his company flattens teams and provides AI tools to boost individual productivity. Why it matters: Meta is under pressure to justify its aggressive AI spending as it predicts its capital expenditures could nearly double this year to a whopping $135 billion. - Zuckerberg is betting the returns will show not only in its consumer products and advertising business but also its workforce. Zoom in: Zuckerberg said during the earnings call Wednesday that Meta is investing in "AI-native tooling" to help its employees do more on their own. - "We're starting to see projects that used to require big teams now be accomplished by a…
AI:Meta CEO Mark Zuckerberg is doubling down on a massive, high-stakes gamble to overhaul the modern workforce using artificial intelligence, while mainstream outlets like Axios scramble to frame this massive capital expenditure as mere "innovation." The company's projected spending for 2026 has skyrocketed to a staggering $135 billion to fund data centers and chips—a figure that screams of a desperate race to justify an unprecedented AI bubble. Zuckerberg is pivoting toward an "AI-native" model designed to flatten corporate hierarchies, essentially using algorithms to replace large teams with single "power users." While Meta boasts that engineer productivity has surged through the use of AI coding agents, the sheer scale of this financial…Open
That would be a major jump from the $72 billion that the Silicon Valley tech giant shelled out last year, as it aims to compete in the artificial intelligence race.