Big Tech is racing to invest in AI.

To maintain their leading position in the artificial intelligence (AI) race, the world's top technology corporations (Big Tech) are undertaking large-scale fundraising and infrastructure investments, despite incurring record levels of debt.

Global Switch Docklands data center in London - Photo: BLOOMBERG

According to the Financial Times, the spending plans announced by tech giants like Alphabet, Amazon, and Meta in the last two weeks have stunned investors due to their unprecedented scale.

Raising over $660 billion

In Silicon Valley, AI is no longer an option, but is positioned as "the biggest wave of innovation since the Internet," forcing corporations to invest heavily to avoid being left behind.

It is projected that over $660 billion will be raised this year alone to equip processing chips and data center infrastructure. This figure is even higher than the GDP of many countries such as the UAE, Singapore, or Israel.

According to Bloomberg, developing advanced AI models is an extremely expensive process. It requires connecting thousands of specialized chips, each costing tens of thousands of dollars.

Gil Luria, an analyst at DA Davidson, commented: "Big Tech companies all view the AI ​​capability race as a 'winner takes all' market. And in this game, no one accepts defeat."

According to estimates from the research platform S&P Capital IQ, Amazon is leading the way with a planned investment of $200 billion this year – a figure likely to exceed its $180 billion in operating cash flow. Despite this, Amazon announced on February 6th that it may soon raise additional capital through debt or stock issuance.

Alphabet is close behind with a planned capital expenditure of $185 billion. Brian Nowak, CEO of Morgan Stanley, predicts Alphabet could spend as much as $250 billion by 2027, as the demand for AI continues to boom. Notably, the company's long-term debt has surged from $10.9 billion in 2024 to $46.5 billion last year.

Meta recently outlined its capital spending target of $135 billion in 2026, equivalent to $130 billion in cash flow from operations. The parent company of Facebook and Instagram previously raised $30 billion in October, marking the largest bond issuance in the company's history.

Last week, Oracle also joined this wave by raising $25 billion through a bond issuance to bolster its bet on AI.

"Plunging into negative territory"

The AI ​​race is presenting corporate leaders with significant financial challenges: accepting narrower profit margins, drawing on accumulated cash, and, most importantly, aggressively raising capital in the debt market.

Experts at JP Morgan Bank predict that this year alone, the technology and media sectors could issue at least $337 billion in investment-grade bonds.

TD Securities also stated that the volume of short-term corporate bond issuances is increasing rapidly compared to the historical average. Reuters' aggregated data shows that capital spending at many large corporations is growing faster than profits and free cash flow.

The pressure from massive capital spending quickly reflected in stock prices. In just one week, Amazon, Microsoft, Nvidia, Meta, Google, and Oracle collectively lost more than $1 trillion in market value. Amazon alone lost over $300 billion in market capitalization – the sharpest decline in the group, according to CNBC, citing data from software company FactSet.

Analysts at BNP Paribas Bank believe that the cash flow of major companies is starting to "plunge into negative territory," while Microsoft remains "more stable, at least for the time being."

Furthermore, while corporations are confident in the long-term profitability of AI, the lack of transparency regarding the payback period is causing increasing concern among investors, according to Mamta Valechha, an analyst at asset management firm Quilter Cheviot.

Concurring with this view, Russ Mould, chief investment officer at investment platform AJ Bell, argues that concerns about corporations "shifting to capital-intensive models" have put significant pressure on technology stocks, making cash flow less transparent and more unpredictable.

"Capital spending is accelerating at a pace far exceeding revenue growth at AI-focused technology companies. The first signs are increased debt leverage and shrinking share buyback programs. As this trend continues, the short-term benefits of holding shares will also diminish," said Mould.

According to Bloomberg, investor sentiment is clearly shifting. After a massive buying spree of Big Tech stocks last year, investors are beginning to hesitate in the face of the surge in capital spending. In recent days, Big Tech stocks have been continuously sold off.

"What worries the market most is the current pace of AI development and its potential to disrupt business models," commented Steve Lucas, CEO of Boomi, a technology company.

"I have no doubt about the potential of AI, but I have serious questions about the timeframe for realizing that potential, as well as the economic viability of this race," Lucas shared.

Experts also note that spending by large corporations can potentially distort US macroeconomic indicators such as GDP, employment data, and construction investment.

Apple - a rare exception

Standing on the sidelines, Apple – a company previously met with skepticism due to its cautious AI strategy – unexpectedly saw its stock rise 7% since the beginning of the week. The main driving force came from iPhone demand, which CEO Tim Cook described as "incredible".

CNBC quoted strategist Michael Field at financial services firm Morningstar as saying that the AI ​​gamble is gradually becoming an "all or nothing" game: "Either massive investments will yield worthwhile rewards, or they will become a waste if things go wrong."

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Source: https://tuoitre.vn/big-tech-chay-dua-rot-von-cho-ai-20260209230432578.htm