The AI boom isn't going anywhere

"Meta raised its spending forecast, saying its capital expenditures on AI infrastructure and the like will be at least $70 billion this year, and "notably larger" next year. Google parent Alphabet - fresh off a record $100 billion revenue last quarter - raised its own spending forecast for the year to at least $91 billion. Microsoft CEO Satya Nadella said strong demand was the reason they "continue to increase our investments in AI across both capital and talent.""

"Tech giants and their investors are thrilled by all the new business. Still, some of the discussion in this week's earnings calls suggests that demand is coming from companies spending beyond their means or financing each other in a loop that could unravel if one link breaks. Zoom out: The AI boom is so large, and at this point so self-sustaining, it's taken on an economic life of its own."

"Federal Reserve chair Jerome Powell, during a news conference Wednesday, rejected the idea that the Fed lowering the cost of money would fuel an AI bubble in some way. "I don't think that the spending that happens to build data centers all over the country is especially interest sensitive," Powell said. "It's based on longer-run assessments that this is an area where there's going to be a lot of investment that's going to drive higher productivity and that sort of thing.""

Major technology firms significantly raised their capital spending forecasts for AI infrastructure, with Meta projecting at least $70 billion this year and Alphabet raising spending to at least $91 billion. Microsoft attributed rising investments to strong demand and increased spending on both capital and talent. Investors view the surge as a major economic driver, and hundreds of billions in spending are supporting broader economic growth. Concerns exist that some demand may be driven by companies overextending or financing one another, creating potential systemic risk if a link fails. Federal Reserve commentary downplayed interest-rate sensitivity of data-center investment. Industrial firms show ongoing evidence of AI-driven impact.

Read at Axios