All that revenue growth may slow down if hyperscalers abruptly scale back their AI buildout plans. , for example, carried more debt on its balance sheet than cash in Q2 due to the aggressive AI expenditure. In Q4 2024, it had a net cash position of almost $22 billion. This is being called "Big Tech's debt boom" as the cash flow is not enough to fund data center development.
Mark Zuckerberg's Meta is spending untold billions on infrastructure and top talent for its AI ambitions. In fact, the CEO announced during the company's earnings call on Wednesday, Meta will be spending between $70 billion and $72 billion on AI this year - up from its previous estimate of $66 billion to $72 billion, as CNBC reports. Unsurprisingly, that cash bonfire isn't going over well with investors.
When we put it in perspective, think of everything currently running on servers in the world, the traditional ones: every bank, every transaction through Visa or ATMs, everything that the government does for you, every retail purchase, the entire coordination of the supply chains around the world, every piece of payroll, unified communication, social streaming services and gaming. They all run on servers.
Though Meta, Amazon, Microsoft, Google, and Tesla are expected to have spent some $560 billion on AI development by the beginning of next year, their collective revenue from AI comes in at a paltry $35 billion. In the first half of 2025, the Atlantic notes, business spending on AI added more to GDP growth in the United States than all consumer spending combined.
Researchers at Pantheon Macroeconomics found that AI-related spending accounted for a 0.5 percentage point difference in annualized GDP growth for the first half of the year.
The S&P 500 is up 10% year-to-date, powered by the 'Magnificent Seven' tech giants whose foreign-heavy revenues are being boosted by the weaker dollar. Concentration in the top 10 stocks is at its highest since the 1960s, with earnings strength - 83% of companies beating estimates - driving sentiment.
