Wall Street analysts suggest that major tech companies could be overspending on artificial intelligence (AI) infrastructure, with a combined capital expenditure of approximately $710 billion expected this year alone. This figure translates to nearly $2 billion daily, raising concerns among investors about potential waste reminiscent of the 1999 dot-com bubble.
The five largest hyperscalers—Microsoft, Amazon, Alphabet, Meta, and Oracle—are channeling this vast expenditure toward enhancing their AI capabilities, which are projected to generate a total addressable market of approximately $7 trillion across three main revenue streams. These include consumer subscriptions, enterprise automation for knowledge workers, and physical automation in various industries, each with distinct economic impacts.
The anticipated return on invested capital (ROIC) at full maturity could reach around 27-28%, illustrating that despite current short-term volatility, these investments may offer substantial long-term returns, especially as AI technology continues to evolve and potentially lead to breakthroughs in artificial general intelligence (AGI).
