Big Tech's AI spending keeps rising as investor and spending signals start to diverge
The spending plans are still growing, but the returns and the valuations of AI companies are showing signs of strain.
Amazon, Microsoft, Alphabet and Meta have told investors they will spend at least $720 billion on capital expenditure this year, mostly on AI infrastructure, on top of at least $1 trillion in committed spending for later years. Alphabet's Search ad revenue grew 12% last quarter, down from 17% a year earlier, and its chief business officer tied the drag to lower monetization of AI Mode, while Alphabet stock fell 13% in a single day. Separately, Ramp data shows business AI token spending rose only 1.5% across August and September after a 42% jump in July, even as usage volumes kept climbing. Ramp's economist attributes the stall to price cuts by OpenAI and Anthropic and to companies getting better at controlling AI costs, not to weaker demand. Bloomberg reports that Anthropic's potential valuation has fallen from about $2 trillion to $1.2 to $1.3 trillion and that OpenAI has lowered its proposed valuation to $1.25 trillion.
Why it matters
For investors and people who follow the industry, the central question is whether the large AI infrastructure budgets will be matched by revenue. Google's Search ad growth has slowed and its stock fell 13% in one day, while business spending on AI tokens has nearly stalled, even though usage keeps rising. The slowdown is attributed to lower prices and better cost control rather than weaker demand, which means the pressure falls on the prices AI providers can charge. Reported valuation cuts for Anthropic and OpenAI suggest the market is already reassessing what these companies are worth.
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