Core Viewpoint - The traditional success model of large tech companies is being challenged by the increasing capital intensity required for AI development, which could fundamentally change their business dynamics [1][4]. Group 1: Capital Expenditure Trends - Major tech companies like Alphabet, Amazon, Meta, and Microsoft are projected to spend over $380 billion on capital expenditures this fiscal year, a significant increase of over 1300% compared to a decade ago [1]. - Microsoft's capital expenditure now accounts for 25% of its revenue, more than triple the level from ten years ago, indicating a shift towards a more capital-intensive business model [2]. Group 2: Market Reactions and Stock Performance - Despite uncertainties regarding future returns, investor confidence in the AI initiatives of these tech giants remains high, with stock prices generally rising; for instance, Microsoft's stock increased by 15% in 2025 [2]. - Meta's stock faced a significant drop of 11% following its third-quarter earnings report, reflecting market concerns over the lack of a clear path to profitability from increased AI spending [2]. Group 3: Financial Implications and Risks - The rising depreciation costs associated with AI chips and servers could severely impact profit growth, as suggested by hedge fund manager Michael Burry [3]. - Companies are increasingly turning to debt and off-balance-sheet financing to fund their expenditures, which introduces additional risks; for example, Meta issued $30 billion in bonds, marking the largest public offering of high-rated corporate bonds this year [3]. - The shift from a low-capital to a capital-intensive business model may lead to lower valuations, as investors typically pay less for companies with higher capital intensity [3][4].