Electricians are getting harder to find, and some construction projects are on hold. Smartphones are expected to get pricier for potentially years to come. And promising innovations are being starved of investment funding. Those are just some of the domino effects from the technology industry’s insatiable spending on artificial intelligence, which is diverting resources and attention from other sectors of the economy.
Five leading public AI companies are collectively on track to spend about $700 billion this year on big-ticket projects, as they splurge on building and outfitting data centers stuffed with powerful computer chips to turbocharge AI calculations. That outlay by Amazon, Google, Microsoft, Meta and Oracle will nearly double what they spent in 2025 and be equal to three-quarters of the recent annual budget for the U.S. military. (Amazon founder Jeff Bezos owns The Washington Post.)
Tech companies say that spending or borrowing a fortune to develop AI is already delivering higher revenue from businesses and consumers eager to use the technology. But critics worry that the up-front costs to develop AI have become so mammoth that the investment can possibly pay off only if AI reshapes life, work and the economy in a way that uncorks massive new profits for these technology firms.
JPMorgan calculated last fall that the tech industry must collect an extra $650 billion in revenue every year — three times the annual revenue of AI chip giant Nvidia — to earn a reasonable investment return. That marker is probably even higher now because AI spending has increased.
OpenAI, which unleashed the nation’s AI mania with the public debut of ChatGPT in late 2022, expects to lose more than $100 billion through the end of the decade, the technology news publication the Information reported in September. (The Post has a content partnership with OpenAI.)
It won’t be clear for some time whether AI will continue improving as quickly as it has in the past few years, and makes people and business much more productive. What is clear is that every dollar spent now on its development raises both the potential reward and the risks for its backers.
“It is possible that the amount invested in AI in the U.S. since the middle of 2022 exceeds all prior investments in the entire tech industry,” Roger McNamee, an early backer of Facebook in his 40-year career as a technology investor, said in an email. “That alone should give everyone pause.”
While the potential payoff is years away, the massive spending on AI is creating scarcity today — even for companies that aren’t primarily focused on it.
Apple told its investors last week that the company is having trouble buying enough of two different types of computer chip that are essential for iPhones and Mac computers.
AI companies also need gobs of some of those same chips to build out data centers, and there aren’t enough for everyone. That insatiable demand has escalated the price of the memory chips that make smartphones and computers feel zippy, according to industry analysts and manufacturers. The added cost is set to translate into higher sticker prices for consumer electronics.
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