Google shares fell more than 7% on Thursday after the company raised its capital expenditure forecast for the year from a previous $190 billion to a range of $195 billion to $205 billion, according to MSX.COM data. The move put fresh attention on how expensive the artificial intelligence race in Silicon Valley is becoming, with the full cost still far from clear.
Google is the first major technology company to report quarterly earnings, while Meta, Microsoft and Amazon are scheduled to release results next week. The four companies had already disclosed in April that they could collectively spend as much as $725 billion on AI development this year. If Google’s revised spending plan is any indication, that figure could rise further by the end of next week.
Even so, the return on those investments remains uncertain. Thomas Montero, a senior analyst at an investment firm, said Google’s larger spending plan was “not satisfying,” adding that a rising interest-rate environment and continued supply-demand tightness in AI infrastructure may be making the idea of funding such expansion indefinitely through cash flow less attractive.
Google shares fell more than 7% on Thursday after the company raised its capital expenditure forecast for the year from a previous $190 billion to a new range of $195 billion to $205 billion, according to MSX.COM data.
The development renewed concerns about the cost of the artificial intelligence race in Silicon Valley. The report said the full price of that competition remains unclear to a large extent.
Google is the first major technology company to post quarterly earnings. Meta, Microsoft and Amazon are due to report next week. The four companies had previously disclosed in April that they were set to spend up to $725 billion combined on AI development this year. If Google’s revision is a guide, that total could increase again by the end of next week.
Even with spending moving higher, the return on those investments remains uncertain.
Thomas Montero, a senior analyst at an investment firm, said Google’s larger spending plan was “not satisfying.” He added that, with interest rates continuing to rise and AI infrastructure still facing supply-demand tightness, the idea that companies can keep funding expansion through cash flow forever may be losing appeal.
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