Svmuu News: Google (GOOG.O) saw its stock price fall more than 7% on Thursday after raising its capital expenditure forecast for this year from the previous $190 billion to a range of $195 billion to $205 billion. This serves as yet another reminder that the full cost of the AI race in Silicon Valley remains largely unknown.
Google was the first major tech company to report quarterly earnings; Meta, Microsoft, and Amazon are set to report next week. These four companies had previously revealed in April that they would collectively invest up to $725 billion in AI development this year. Based on Google, that figure is expected to rise further by the end of next week.Nevertheless, the return on these investments remains unclear. Thomas Montero, a senior analyst at an investment firm, stated: “Google’s larger spending plans are ‘unsatisfactory.’ Coupled with a rising interest rate environment and ongoing supply-demand tensions in AI infrastructure, the idea that companies can forever rely on cash flow for financing may be losing its appeal.” (Jin Shi)