Yahoo Finance·2025-12-02 15:08Core Insights - The traditional strategy for Big Tech has been to create disruptive innovations, achieve high growth rates, and maintain low spending, but this is now challenged by the increasing capital intensity required for AI development [1][2] Group 1: Capital Expenditures - Major tech companies like Alphabet, Amazon, Meta, and Microsoft are projected to spend over $380 billion on capital expenditures in their current fiscal years, marking a more than 1,300% increase from a decade ago [3] - Microsoft's capital expenditures now account for 25% of its revenue, which is over three times the ratio from ten years ago, placing it among the top 20% in the S&P 500 for spending-to-sales ratio [4] Group 2: Market Performance and Investor Sentiment - Despite uncertainties regarding future returns, investors remain optimistic about the AI initiatives of these tech giants, as evidenced by rising stock prices; for instance, Microsoft shares have increased by 16% in 2025 [5] - However, there are signs of skepticism; Meta's stock fell 11% following its third-quarter earnings report due to a lack of clarity on profitability from AI investments, leading to a year-to-date increase of only 9.6%, underperforming the S&P 500 [6]