Meta, Microsoft Test Investors With AI-Fueled Spending Surge

Core Insights - The largest technology companies are heavily investing in AI infrastructure, leading to significant capital expenditures that are raising concerns among investors [1][2] Group 1: Capital Expenditures - Alphabet Inc., Meta Platforms Inc., and Microsoft Corp. collectively spent approximately $78 billion in capital expenditures last quarter, marking an 89% increase from the previous year [2] - Meta is planning to sell at least $25 billion in investment-grade bonds to support its AI infrastructure spending, indicating a strong appetite for borrowing [3] - Microsoft reported a record $34.9 billion in capital expenditures during the September quarter, with its Azure cloud-computing division continuing to see revenue growth [5] Group 2: Investor Reactions - Meta's shares dropped as much as 14% following its spending announcement, marking the worst intraday decline in 18 months, while Microsoft shares fell by 2.5% [3] - Google investors reacted positively to its capital increase, with shares rising by as much as 6.2% after the announcement [4] Group 3: Market Concerns - Analysts are questioning whether the current level of investment in AI is sustainable or indicative of a bubble, with Microsoft executives acknowledging the challenge of meeting increasing demand for AI services [4] - Despite significant investments, Microsoft CFO Amy Hood stated that the company is struggling to keep up with demand, suggesting that the growth in AI services is widespread and not limited to a single area [4]