Major technology companies accumulate R$ 5.6 trillion in contracts to boost Artificial Intelligence

The largest technology corporations based in the United States are allocating billions of dollars to artificial intelligence, expecting this technology to revolutionize both business and the economy. However, the magnitude of these expenditures has generated apprehension among investors, who question when this capital will begin to generate profits.

As reported by The Washington Post, giants such as Google, Microsoft, Meta, Amazon, and Oracle have intensified their investments in AI infrastructure, while the market watches for the potential risks of a speculative bubble.

Silicon Valley shifts focus to the AI race

Historically, companies like Google and Facebook were recognized for their remarkable revenue generation capacity, driven by digital products that reached millions of users and established these companies as market leaders. Currently, a significant portion of this revenue is being redirected to a new technological phase, focused on large data centers, advanced processors, and equipment necessary to support artificial intelligence models.

While proponents of this approach argue that the investment could usher in a new era of productivity and growth, critics express doubts about whether the return will be sufficient to justify the billions invested. Torsten Slok, chief economist at Apollo Global Management, commented to The Washington Post that the functionality of AI is crucial, as its failure would represent a serious problem.

The main vectors of this dispute include the construction of vast data centers to operate AI systems, the acquisition of specialized chips and equipment, the expansion of AI-based software and services, the increase in operational costs of this infrastructure, and the growing pressure for more agile financial results.

Rising spending puts investors on alert

Projections indicate a change in the financial profile of these technology companies. Due to the costs associated with AI infrastructure, Google, Amazon, Microsoft, Meta, and Oracle may show negative free cash flow in 2026.

Google serves as a prominent example: in the last three analyzed months, the company spent $1.15 for every dollar earned in cash, mostly allocated to purchasing chips, equipment, and areas reserved for new data centers. Despite this financial pressure, the companies maintain profitability under conventional accounting models, which allow these costs to be distributed over multiple years.

Andy Jassy, CEO of Amazon, defended the investments, assuring that the demand for AI solutions remains robust. He told investors that the company has a clear outlook for achieving strong financial returns.

AI already influences prices and economic concentration

Competition for essential components for artificial intelligence is already impacting other segments of the market. The increased demand for chips has raised costs for companies that rely on these inputs, pressuring the prices of devices such as smartphones, laptops, and consoles.

Additionally, the expansion of data centers has intensified concerns about energy consumption in certain locations in the United States. Another point of attention lies in the distribution of economic benefits. According to Barbara Denham, chief economist at Oxford Economics, regions that already have concentrated technology and wealth, such as Silicon Valley, New York, Seattle, and Washington, tend to reap the greatest benefits.

Denham emphasized that the economic gains resulting from AI advancement are a self-reinforcing cycle. Although artificial intelligence continues to attract massive investments, the market is now monitoring a fundamental question: whether the technological promises will be able to keep pace with the speed at which expenses for its development are being incurred.

Artificial intelligence is beginning to generate financial results for tech giants; however, the accelerated increase in investments is exerting strong pressure on the financial health of these corporations.

Financial Market Analysis

According to Reuters, the financial market awaits the next earnings reports to verify whether the increase in revenue will be able to keep pace with the high costs of technological infrastructure. The so-called hyperscalers—which include Microsoft, Alphabet, Amazon, Meta, and Oracle—continue to significantly increase their investments in AI.

Projections indicate that by 2027, spending growth is expected to surpass free cash flow generation. A survey conducted by Reuters, using estimates from LSEG, points out that these companies are expected to increase their annual operating cash flow by US$ 340 billion (equivalent to approximately R$ 1.72 trillion) between 2025 and 2027. Conversely, planned investments for the same period are expected to grow by about US$ 534 billion (approximately R$ 2.71 trillion), representing an investment of US$ 1.57 for every US$ 1 generated in cash.

Signs of Return and Model Shift

Although cost challenges are evident, signs of positive returns have already emerged. Microsoft reported that its AI division achieved annual revenue exceeding US$ 37 billion (about R$ 187.6 billion). Amazon's AWS demonstrated 28% growth during the first quarter.

Shay Boloor, Chief Market Strategist at Futurum Equities, commented that investors are minimizing the transformative impact of AI on the business model of Big Tech. He emphasized that sectors such as software, advertising, and cloud computing have increasingly become dependent on large investments in physical infrastructure. This movement includes building new data centers, acquiring servers and network equipment, expanding cloud infrastructure, and increasing demand for artificial intelligence solutions.

Specific Concerns Regarding Oracle

Regarding Microsoft, the company recorded US$ 35.8 billion (about R$ 181.5 billion) in operating cash flow in the second fiscal quarter, while its investment expenditures totaled US$ 37.5 billion (approximately R$ 190.1 billion). There is a concern that the increase in profits may not be sufficient to justify the investments if capital expenditures are draining cash, given that the primary goal of the companies is to generate profit.

David Russell, Global Head of Market Strategy at TradeStation, commented to Reuters on the scenario. Among the five analyzed companies, Oracle generates the most apprehension. Its shares have fallen by 36% over the year, its free cash flow showed a negative result, and the company plans to raise between US$ 45 billion and US$ 50 billion (equivalent to R$ 228.2 billion to R$ 253.5 billion) to expand its cloud infrastructure. Upcoming financial statements will be crucial in determining whether AI progress can keep pace with this level of expenditure.