The AI industry is running on FOMO

For Big Tech, a penny invested in AI is a penny earned... Maybe. After an indeterminate amount of time. Investors hope.

On earnings calls last week, Amazon, Google, Microsoft, and Meta reported more than $350 billion this year on capital expenditures, or longer-tail investments in a company’s future. All four told investors to expect the number to skyrocket even further next year: Microsoft said “higher,” Amazon an “increase,” Google a “significant increase,” and Meta “notably larger.”

That probably translates to more than $400 billion total for the four companies next year, according to Joe Fath, partner and head of growth at Eclipse VC.

The return on investments for these companies so far is opaque. Dedicated AI companies are burning through cash in the meantime: OpenAI reportedly hit $12 billion in annualized revenue this summer — while reportedly being on track to burn through $115 billion through 2029.

Tension over this mismatch, Fath said, is ratcheting up. There’s a “push and pull between those companies and investors,” he added. “Investors are saying, ‘Am I going to get a return on this spend?’” It’s one of the increasingly clear indicators that some parts of the AI industry are a bubble — but it doesn’t yet tell us what happens after it pops.

AI hype has remained extremely high for several years, and startup valuations have hit eye-popping numbers. OpenAI, for instance, is reportedly hoping for a $1 trillion IPO in 2026 or 2027 and planning to raise $60 billion or more.

But AI companies insist there’s still not enough money for chips, data centers, and other resources.