AI bets that fueled big tech's surge now threaten rich profits

Much of the money is going toward things like semiconductors, servers and networking equipment

- Bloomberg

Some investors are questioning the amount of cash Big Tech is throwing at artificial intelligence, fueling concerns for profit margins and the risk that depreciation expenses will drag stocks down before companies can see investments pay off.

"On a cash flow basis they've all stagnated because they're all collectively making massive bets on the future with all their capital," said Jim Morrow, founder and chief executive officer at Callodine Capital Management. "We focus a lot on balance sheets and cash flows, and so for us they have lost their historical attractive cash flow dynamics. They're just not there anymore."

Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp. are projected to spend $311 billion on capital expenses in their current fiscal years and $337 billion in 2026, according to data compiled by Bloomberg.