In race to build AI, tech plans a big, expensive plumbing upgrade

The spending that the industry’s giants expect artificial intelligence to require is starting to come into focus — and it is jarringly large.

Microsoft said generative A.I. had contributed to more than a fifth of the growth of its cloud computing business.Credit...Krisztian Bocsi/Bloomberg

Written by Karen Weise

The spending that the industry’s giants expect artificial intelligence to require is starting to come into focus — and it is jarringly large.

If 2023 was the tech industry’s year of the artificial intelligence chatbot, 2024 is turning out to be the year of AI plumbing. It may not sound as exciting, but tens of billions of dollars are quickly being spent on behind-the-scenes technology for the industry’s AI boom.

Companies from Amazon to Meta are revamping their data centers to support AI. They are investing in huge new facilities, while even places like Saudi Arabia are racing to build supercomputers to handle AI. Nearly everyone with a foot in tech or giant piles of money, it seems, is jumping into a spending frenzy that some believe could last for years.

Microsoft, Meta, and Google’s parent company, Alphabet, disclosed this past week that they had spent more than $32 billion combined on data centers and other capital expenses in just the first three months of the year. The companies all said in calls with investors that they had no plans to slow down their AI spending.

In the clearest sign of how AI has become a story about building a massive technology infrastructure, Meta said Wednesday that it needed to spend billions more on chips and data centers for AI than it had previously signaled.

“I think it makes sense to go for it, and we’re going to,” Meta CEO Mark Zuckerberg said in a call with investors.

Story continues below this ad

Google’s capital expenditures — largely the money that goes into building and outfitting data centers — almost doubled in the first quarter, the company said. Microsoft’s were up 22%. Amazon, which will report earnings Tuesday, is expected to add to that growth.

Meta’s investors were unhappy with Zuckerberg, sending his company’s share price down more than 16% after the call. But Zuckerberg, who just a few years ago was pilloried by shareholders for a planned spending spree on augmented and virtual reality, was unapologetic about the money that his company is throwing at AI. He urged patience, potentially for years.
“Our optimism and ambitions have just grown quite a bit,” he said.

This article originally appeared in The New York Times.