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Why Big Tech's $700 billion AI splurge is misleading

Business Insider·Alistair Barr·about 1 month ago
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Meta CEO Mark Zuckerberg. Ed Mulholland/Zuffa LLC Rising component prices are driving Big Tech's AI spending surge. Microsoft and Meta's capital expenditure hikes largely result from higher component prices. That suggests Big Tech companies haven't massively expanded their buildout plans lately. Big Tech's AI spending is surging, though not necessarily because companies are building significantly more capacity. This week, industry executives pointed to the same underlying issue: sharply rising component costs, especially for memory chips , are inflating capital expenditures spent on data centers and other equipment. "We are increasing our infrastructure capex forecast for this year. Most of that is due to higher component costs, particularly memory pricing," Meta CEO Mark Zuckerberg told analysts on Wednesday. Microsoft echoed that trend , with CFO Amy Hood saying that roughly $25 billion of its projected $190 billion in 2026 capex is tied to higher component prices.…

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