Building artificial intelligence strengthens its role as a global catalyst this week
By Reuters | Published: 2025-10-31 16:09:00 | Source: Fast Company – technology
A momentous week in the technology sector has made it clear that there is no sign of the boom in building AI infrastructure slowing down – despite talk of a bubble.
NVIDIA, whose processors form the backbone of the artificial intelligence revolution, has become the first company with a market value exceeding $5 trillion. Microsoft and OpenAI signed a deal to boost the ChatGPT maker’s fundraising ability and OpenAI immediately began laying the groundwork for an IPO that could value the company at $1 trillion.
Amazon said it would cut 14,000 jobs at the company, just days before its cloud unit posted its strongest growth in nearly three years.
These developments, along with numerous earnings calls and interviews with executives, make it clear that AI has cemented itself as the single biggest catalyst for global corporate investment and market rally driver, even as some question the sustainability of both.
Endless spending
It was expected that the revenues of Microsoft, Alphabet and other technology giants would rise. But more than 100 global non-technology companies mentioned data centers in quarterly calls this week, including Honeywell, turbine maker GE Vernova and heavy equipment maker Caterpillar.
Sales at Caterpillar’s division that supplies data centers jumped 31% last quarter. “We’re certainly really excited about the core power opportunity with data centers,” CEO Joseph Creed said this week.
“The AI supply chain now includes energy, industrials and cooling technology, and investors are looking at the entire ecosystem rather than just the underlying technology,” said Ayako Yoshioka, portfolio manager at Wealth Enhancement Group.
Goldman Sachs estimates that global spending on AI-related infrastructure could reach $3 trillion to $4 trillion by 2030. Microsoft, Amazon, Meta, and Alphabet are expected to spend nearly $350 billion combined this year.
Investment in AI supports global trade, with about 60% of US data center capital expenditures being spent on imported IT equipment, according to Oxford Economics, most of it semiconductors from Taiwan, South Korea and Vietnam.
At least two dozen companies representing more than $21 trillion in combined market value have announced quarterly earnings or spoken with Reuters about artificial intelligence in recent days. Many, including Procter & Gamble and Bulliden, noted that the hoped-for productivity gains, although mixed, were beginning to appear.
“We strongly believe that the future contribution of AI in R&D, and in the development of innovation, will increase exponentially,” Schindler CEO Paolo Compagna told Reuters, although he said the impact of AI was yet to be seen. The Swiss elevator and escalator maker raised its annual margin forecast last week.
Year-over-year revenue growth in the U.S. technology sector rose more than 15%, outpacing all other sectors, according to LSEG data.
Apple said it is working to significantly increase investment in artificial intelligence, and Amazon has forecast $125 billion in capital spending in 2025.
Concerns about overvaluation
Since ChatGPT’s debut in 2022, global stock values have risen 46%, or $46 trillion. A third of these gains came from AI-related companies, according to Bespoke Investment Group.
Analysts warn of an accelerating replacement cycle for servers, accelerators and chips as each new generation achieves massive performance gains. The useful life of AI chips is shrinking to five years or less, forcing companies to “write off assets faster and replace them sooner,” said Tim Arcuri, a semiconductor analyst at UBS.
The rise in spending related to artificial intelligence has widened the gap between investment and returns, as a Reuters analysis showed that ratios of sales to capital expenditures at major technology companies fell sharply with expenses on chips and data centers growing faster than revenues. Capital expenditures represent a larger portion of cash generated by some companies’ operating activities, causing some concern for investors.
“If there is no progress towards monetization within three years, the market will start asking tough questions,” said Somali Sanyal, senior portfolio manager at investment firm Xponance.
Microsoft reported a record $35 billion in capital spending last quarter and forecast increased spending, prompting Bernstein analyst Mark Moerdler to question whether the company is spending in a bubble. Amy Hood, Microsoft’s chief financial officer, responded that AI-related demand still outstrips Microsoft’s spending. “I thought we were catching up. We’re not,” she said.
Some companies are financing AI projects with debt. Oracle’s $18 billion bond sale last month was one of the largest ever for a technology company, and looks set to be surpassed by an up to $30 billion bond sale from Meta Platforms. News of the largest bond sale ever sent Meta shares down 11% on Thursday.
However, many economists say the AI cycle has not yet been exhausted. Goldman estimates that investment in AI currently represents less than 1% of US GDP, far below the peaks of 2% to 5% during the electricity and dot-com booms.
“We are in the early stages… and the pace of AI innovation is the fastest we have seen in decades,” said Nick Evans, portfolio manager at Polar Capital Technology Trust.
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(Tags for translation)Artificial Intelligence
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