Does the math add up for Google, Meta, Microsoft? They have to do it?

Investment Analysis Clubs Macro Economic Trends and Risks
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Google is not spending all of its revenue on AI, but it is in the middle of the largest capital expenditure (capex) spending spree in tech history. [1, 2]

Driven by an explosion in enterprise demand, the tech giant’s AI infrastructure investments are consuming a massive portion of its cash flow—prompting the company to raise nearly $$85$ billion in equity capital to fund it. [2]

The AI Capex & Revenue Breakdown

  • Revenue vs. Spending: Google’s parent company, Alphabet, brought in over $$422$ billion in revenue. However, capital expenditures are projected to hit $$180$ billion to $$190$ billion, with forecasts pointing to a further increase.
  • Historic Capital Raise: Because the spending outpaced free cash flow, Alphabet initiated a massive equity offering. This included a $$34.75$ billion public offering, an at-the-market program to sell up to $$40$ billion in shares, and a $$10$ billion private placement with Berkshire Hathaway.
  • Where the Money Goes: The funds are largely poured into physical AI compute infrastructure—specifically data centers (such as the massive “Stargate” project in Michigan), custom hardware like TPUs, and training frontier AI models. [9, 10, 11, 12, 13]

Why are they doing it?

  • Google Cloud Demand: Over 75% of Google Cloud customers use AI products, and Google’s overall Cloud division has grown significantly—surpassing $$20$ billion in quarterly revenue.
  • Securing the Tech Stack: By owning everything from the data centers to the microchips, Google aims to vertically integrate AI. This is designed to protect their core advertising search business and ensure they maintain supply chain dominance over rivals like OpenAI and Anthropic. [11, 14, 15, 16]

You can track Google’s exact revenue and spending on the Alphabet Investor Relations page.

If you are following the AI sector, would you like to explore:

  • How much other tech giants like Microsoft, Amazon, and Meta are spending?
  • The details behind the Berkshire Hathaway $10\text{B} private placement?
  • Whether this massive spending is actually translating into long-term profit? [17, 18, 19]

AI responses may include mistakes.

[1] Google owner Alphabet to sell $80bn in stock to fund AI spending spree | Alphabet | The Guardian

[2] Google parent is raising $85 billion for AI. Here's how Sundar Pichai plans to spend it

[3] https://www.ft.com/content/85299cdd-d9b3-4b40-8d10-73fc9ddb4573?syn-25a6b1a6=1

[4] https://www.businesstimes.com.sg/companies-markets/telcos-media-tech/google-cloud-pulls-ahead-big-techs-ai-bet-swells-us700-billion

[5] https://www.ft.com/content/b934037d-7fc6-4f93-acdf-a3ec75f45acc?syn-25a6b1a6=1

[6] Why Google's Record AI Spending May Signal a Turning Point - 24/7 Wall St.

[7] Google’s $80 Billion Equity Plan Suggests Bond Markets Are Feeling the Strain of AI Spending<!-- --> - Barron's

[8] https://www.investors.com/news/technology/google-stock-alphabet-artificial-intelligence-80-billion-capital-raise/

[9] https://finance.yahoo.com/sectors/technology/articles/why-google-record-ai-spending-110400822.html

[10] Google’s AI spending more than doubled YoY, and advertising is picking up the slack

[11] Why Is Google Spending So Much On AI? - by Vin Vashishta

[12] https://www.spglobal.com/ratings/en/regulatory/article/where-are-ai-investment-risks-hiding-s101665242

[13] https://x.com/rohanpaul_ai/status/2030459405762957621

[14] Alphabet investor presentation: June 2026

[15] https://www.youtube.com/watch?v=iHtDB6uuiJw

[16] https://www.instagram.com/p/DYjOvfhgjmi/

[17] https://www.youtube.com/shorts/eJZOKdtiWic

[18] https://www.youtube.com/watch?v=7RlOiSO4Jyo

[19] https://www.youtube.com/shorts/y9gno7cPuCU

3 Likes
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No, the purchase price of individual, top-tier AI hardware (like Nvidia GPUs or custom application-specific integrated circuits) is generally not falling. However, the cost of running AI models is dropping rapidly due to massive improvements in software and infrastructure efficiency. [1, 2, 3, 4, 5]

Hardware & Chip Costs (Rising or Stable)

  • High Demand: Demand from “hyperscalers” (e.g., Google, Microsoft, AWS) to build out data centers remains so explosive that top-tier semiconductor prices stay firmly elevated.
  • Manufacturing Costs: Advanced fabrication nodes and the next-generation memory components (like High Bandwidth Memory, which eats up a large portion of data center budgets) are more expensive to produce. Foundries like TSMC are even planning gradual price increases for their advanced nodes [0.5.1.
  • Component Shortages: Ongoing supply chain bottlenecks and the lucrative nature of AI chips mean prices remain steep across the board. [11]

Software & Inference Costs (Falling)

  • More Efficient Models: While the price to buy the physical chips stays high, advancements in model architecture mean doing specific AI tasks (inference) costs a fraction of what it did in previous years.
  • Better Utilization: Software companies and data centers are finding ways to squeeze far more work out of the exact same silicon, significantly driving down the cost-per-token for businesses. [1, 2, 11]

Could you clarify if you are asking about buying physical AI chips for hardware development, or the cost of building AI software (API/inference pricing)? I can provide much more specific pricing details depending on your focus.

AI responses may include mistakes.

[1] The Falling Cost of AI Favors Software Companies - Harding Loevner

[2] AI costs falling + chip supply chain risks | Sourceability

[3] https://medium.com/coding-nexus/ai-costs-are-going-down-where-is-market-going-abb054a6715a

[4] https://www.datacenterknowledge.com/infrastructure/broadcom-ceo-s-100b-ai-chip-bet-highlights-push-for-silicon-diversity

[5] https://timesofindia.indiatimes.com/blogs/toi-edit-page/empower-be-chipper/

[6] https://finance.yahoo.com/economy/articles/ai-economy-could-crash-mounting-111500824.html

[7] https://finance.yahoo.com/sectors/technology/articles/intels-ai-chip-skips-costly-110300468.html

[8] Without data centers, GDP growth was 0.1% in the first half of 2025, Harvard economist says | Fortune

[9] https://finance.yahoo.com/markets/article/why-nvidia-earnings-must-deliver-massively-131600201.html

[10] https://en.sedaily.com/international/2026/05/21/nvidias-huang-says-ai-demand-growing-parabolically-sees-1

[11] The AI economy could crash on mounting chip costs — and those token costs won't help | Fortune

[12] https://www.wsj.com/tech/tsmc-not-at-risk-of-losing-competitive-edge-ceo-says-b1faf8f3

1 Like
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Of course that is an AI dump in two posts.

Now skip the reality as you see it of dumping the AI info because it was all news stories.

Google even has a private placement of $10 billion from BRK as mentioned in the first post. We know that will get your attention.

Google is far outspending its profit margins. So are the others. The second post discusses the rapid efficiency gains in the software and hardware. The costs are not coming down.

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No, it’s AI slop.

Useless.

Please stop.

12 Likes
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Google and Meta have major ad revenue. They have to do AI to prevent loss of market share to a competitor. They also have means to profit from that investment. They are likely to be major players in AI and strive to be leaders (and survivors). Microsoft less so. They can benefit from Bing and cloud investment.

We shall see how this comes out. Other players in my view have more risk—sometimes much more.

1 Like
6

Goof,

You literally never get anything right.

Ai slop is created by ai.

That was all news stories.

Stop posting on things you can no longer understand or follow.

Really stop complaining when you don’t understand whats going on.

1 Like
7

Paul,

Thanks for continuing the thread instead on whining.

My concern for the players, revenues may drop. The ad dynamics are changing.