""My biggest concern is what economists refer to as ' malinvestment,' Gross said in an email. Gross - who cofounded the fixed-income titan PIMCO and grew its flagship Total Return Fund to $270 billion over nearly three decades - said the tech giants are racing to dominate various AI sectors and "seem willing to risk over-investment in hopes of future monopolies." "Some will fail and current trends - and stock prices based on them - may experience significantly reduced growth," Gross said."
""He singled out AI data centers and the "hundreds of billions" being spent on them by companies like Amazon, Meta, Microsoft, and Oracle. Electricity providers are also " gearing up to supply them," he added. AI companies are investing vast sums in microchips, servers, and other infrastructure they need to build and train increasingly advanced models and harness AI in other ways.""
""Tech giants spending big on AI will have wasted money if they end up as also-rans, Bill Gross said. The billionaire "Bond King" told BI these companies were at risk of frittering away enormous sums. Microsoft, Amazon, and other tech stocks have surged on AI hopes but could disappoint, he said.""
Tech giants are committing enormous capital to AI, building data centers and buying microchips, servers, and other infrastructure to train advanced models. Firms appear willing to risk over-investment to capture dominant market positions, creating the potential for malinvestment. Hundreds of billions are being funneled into AI data centers by major companies, and power providers are preparing to meet the increased electricity demand. Combined planned AI spending tops hundreds of billions this year. The intense market enthusiasm has doubled many top tech valuations, but failed investments could materially reduce future growth and stock performance.
Read at Business Insider
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