Big Tech Doubles Down on AI Infrastructure

The five companies spending the most on artificial intelligence (AI) data centers in the United States doubled their debt load over the past five years to finance their efforts, Bloomberg reported Friday (July 10).

In total, Alphabet, Amazon, Meta, Microsoft and Oracle added about $350 billion to their debt obligations, according to the report.

This marks a change for the software industry, in which companies tend to earn high margins without much regular capital expenditure. While the shift to cloud computing required investment in server farms, the advent of AI data centers accelerated the costs, the report said.

Some investors have had concerns about the scale of the capital expenditures, but Amazon CEO Andy Jassy and Meta CEO Mark Zuckerberg are among the executives who have said they are confident that the demand for AI will make the spending on infrastructure a good investment, per the report.

Debt market investors will be watching the companies’ upcoming quarterly earnings reports for information about how the companies are funding their expansion plans and when the payoff will arrive, the report said.

PYMNTS reported in January that attention had shifted from how much Big Tech was spending on AI to whether those investments were starting to pay off in terms of durable growth and profitability.

The sharp increase in capital expenditures this year, largely driven by investments in data centers, chips and AI infrastructure, intensified scrutiny of margins, cash flow and the pace at which AI-driven products can be monetized.

In April, Meta raised its full-year capital expenditure guidance to $125 billion to $145 billion, up from $115 billion to $135 billion, citing higher memory pricing and additional data center capacity. The company said it had consistently underestimated its compute needs.

Jassy said in an April letter to shareholders that Amazon will continue to bet big on AI because while investment spikes invite scrutiny, the technology is a game changer that will reinvent every customer experience.

“I’ve followed the public debate on whether this technology is over-hyped, whether we’re in a ‘bubble,’ and if the margins and ROIC [return on invested capital] will be appealing,” Jassy said. “My strong conviction, at least for Amazon, is that the answers are no, no, and yes.”