All in on AI
Big Tech isn't letting up on AI spending despite growing impatience among investors concerned about how long it will take to pay off.
Back in 2009, long-serving former General Electric CEO Jack Welch — known during his tenure for his brutal focus on cost-cutting, quarterly earnings and financial performance — rebuked his former guiding philosophy in an interview, deriding shareholder value as “the dumbest idea in the world”.
“Shareholder value is a result, not a strategy,” he said. "Your main constituencies are your employees, your customers and your products.”
That might just be the mantra on the minds of Silicon Valley’s top executives right now, as quarterly earnings season saw them take a more sanguine, dramatically longer-term stance as the AI arms race forces them to spend big.
Take Google parent Alphabet, which beat revenue forecasts in the June quarter but still found itself on the back foot with investors worried about its spend on AI chips and data centres, with their concerns sending the stock tumbling 5%. CEO Sundar Pichai was straightforward, arguing that, when it comes to AI, “the risk of underinvesting is dramatically greater than the risk of overinvesting”.
