Key Points
- Meta plans to double its capital spending to $135 billion to fuel AI growth.
- Tesla will spend $20 billion on AI and robotics and invest $2 billion in xAI.
- Elon Musk is considering building a chip factory to avoid a future supply shortage.
- Microsoft stock fell as investors worried about high costs and slowing cloud growth.
Tech giants are betting the house on artificial intelligence, pledging hundreds of billions of dollars to win the race for the future. Meta Platforms announced it will double its capital spending to a massive $135 billion this year. CEO Mark Zuckerberg told investors to prepare for a “major AI acceleration,” promising new models and products soon. Because Meta’s advertising business remains strong, Wall Street cheered the aggressive spending, sending the stock up nearly 8%.
Elon Musk is also writing huge checks. Tesla plans to spend $20 billion this year on AI, self-driving vehicles, and robotics—nearly twice what analysts expected. Musk also stated Tesla will invest another $2 billion into his startup, xAI.
The demand for computer chips is now so intense that Musk is considering building his own semiconductor factory. He warned that without making their own chips, Tesla risks hitting a “chip wall” that could stop growth.
Microsoft had a harder time pleasing investors. Its stock dropped over 6% after the company revealed high spending costs while barely meeting growth expectations for its cloud business. This reaction highlights how nervous the market is becoming about the massive price tag of the AI boom.
This spending spree is creating a gold rush for hardware providers. Companies like Samsung, SK Hynix, and ASML—which make the essential memory chips and machinery for AI—reported profits that grew several times over.
However, this demand is causing a global problem. The world is running out of chips, creating a supply imbalance that threatens to disrupt other industries, including smartphones and car manufacturing.
Experts say the industry is in uncharted territory. While companies like Samsung race to release next-generation memory chips to catch up with demand, investors remain cautious. They are willing to fund the boom, but they are quick to sell if a company shows any sign of weakness.
