The top five companies spending on AI data centers in the United States have doubled their debt load over the past five years to fund their efforts, Bloomberg reports. I mentioned Friday (July 10).
In total, alphabet, Amazon, dead, Microsoft and oracle The report added about $350 billion to its debt obligations.
This represents a change in the software industry, where companies tend to achieve high profit margins without regular capital spending. While the shift to cloud computing requires investment in server farms, the emergence of artificial intelligence data centers has accelerated costs, the report said.
Some investors had concerns about the size of the capital expenditures, but Amazon CEO Andy Jassy And CEO of Meta Mark Zuckerberg They are among the executives who said they were confident that demand for AI would make infrastructure spending a good investment, according to the report.
The report said that investors in the debt market will be watching companies’ upcoming quarterly earnings reports to obtain information about how companies are financing their expansion plans and when the bonus will arrive.
PYMNTS reported in January that attention had shifted from the size of big tech companies Spending on artificial intelligence Whether these investments are beginning to pay off in terms of lasting growth and profitability.
The sharp increase in capital expenditures this year, driven largely by investments in data centers, chips and AI infrastructure, intense scrutiny of margins, cash flow, and the pace at which AI-driven products can be monetized.
In April, Meta raised its full-year capex guidance to $125 billion to $145 billion, from $115 billion to $135 billion, citing higher memory prices and ancillary benefits. Data center capacity. The company said it continually underestimated its computing needs.
Amazon will continue to bet big on artificial intelligence for some time, Jassy said in a letter to shareholders in April investment Rivets call for scrutiny, technology is a game changer and will reshape every customer experience.
“I have followed the public debate about whether this technology is overrated, whether we are in a ‘bubble,’ and whether margins and return on invested capital (ROIC) will be attractive,” Jassy said. “My strong belief, at least for Amazon, is that the answers are no, no, and yes.”
