Leading tech giants are racing to expand their AI infrastructure, with companies like Microsoft, Meta, and Amazon dedicating billions to meet rising demand. However, the heavy spending on data centres and computing power is sparking concern among investors who are eager for quicker returns. Big Tech’s significant capital investments come with mounting costs, threatening profitability and raising questions about how quickly these ventures will yield results.
Despite exceeding recent earnings forecasts, Big Tech stocks dropped on Thursday, underlining the pressure they face to balance AI expansion with shareholder expectations. Microsoft and Meta reported increased spending in their latest quarters, yet their shares fell, with Microsoft dropping 6% and Meta 4%. Amazon’s shares saw a brief dip before recovering on news of a strong third-quarter performance. Analysts point to a challenging road ahead as these firms juggle AI ambitions with market demands for near-term gains.
The challenges extend to capacity issues, with firms like Microsoft struggling to keep up with demand due to data centre constraints. Meanwhile, Meta forecasts that its AI-related expenses will increase significantly next year, and chip manufacturers like Nvidia and AMD are racing to fulfil orders. This supply bottleneck highlights the complex task of scaling up AI services, adding a layer of unpredictability to Big Tech’s efforts.
Despite short-term risks, companies remain committed to AI. Amazon CEO Andy Jassy described AI as a “once-in-a-lifetime” opportunity, while Meta’s Mark Zuckerberg likened today’s investment climate to the early days of cloud computing. As firms continue to ramp up infrastructure spending, they are counting on long-term returns, hoping to transform initial scepticism into eventual success.
Thailand’s Board of Investment (BOI) announced on Friday it has approved $2 billion in new investments aimed at bolstering the nation’s data centre and electronics manufacturing sectors. Among these, a significant investment comes from a subsidiary of Alphabet Inc., which will allocate 32.8 billion baht ($968 million) toward the development of a hyperscale data centre. This facility is expected to strengthen Thailand’s data infrastructure, accommodating the growing demand for digital services and data management across Southeast Asia.
The BOI highlighted that these investments align with Thailand’s strategic vision to transform into a regional tech and manufacturing hub. By enhancing its digital infrastructure and encouraging foreign investment in high-tech sectors, the country hopes to create a more resilient, future-ready economy. The addition of hyperscale data centres, in particular, will enable Thailand to meet increasing demands from cloud service providers, e-commerce companies, and other data-intensive industries.
Thailand has seen a surge in interest from global tech giants looking to establish operations in Southeast Asia, a region marked by rapid digital adoption and economic growth. BOI’s continued support for high-tech projects like these reflects the country’s focus on building a sustainable ecosystem for digital and electronics manufacturing, positioning Thailand as a key player in Asia’s digital economy.
OpenAI has introduced new search functions to its popular ChatGPT, making it a direct competitor with Google, Microsoft’s Bing, and other emerging AI-driven search tools. Instead of launching a separate search engine, OpenAI chose to integrate search capabilities directly into ChatGPT, which will pull information from the web and relevant sources based on user questions.
Initially, ChatGPT’s search feature will be available to Plus and Team users, with plans to expand access to enterprise and educational users, as well as free users, in the coming months. OpenAI’s partnerships with major publishers like Condé Nast, Time, and the Financial Times aim to provide a rich pool of content for ChatGPT’s search.
This launch follows OpenAI’s selective testing of SearchGPT, an AI-based search prototype, earlier in the year. With its recent funding round boosting its valuation to an estimated $157 billion, OpenAI continues to strengthen its standing as a leading private AI company.
Indonesia has banned sales of Google’s Pixel smartphones due to regulations requiring a minimum of 40% locally manufactured components in devices sold within the country. This decision follows a similar ban on Apple’s iPhone 16 for failing to meet these content standards. According to Febri Hendri Antoni Arief, a spokesperson for Indonesia’s industry ministry, the rules aim to ensure fairness among investors by promoting local sourcing and partnerships.
Google stated that its Pixel phones are not officially distributed in Indonesia, though consumers can still import them independently if they pay applicable taxes. Officials are also considering measures to deactivate unauthorised imports to enforce compliance.
Despite Google and Apple not being leading brands in Indonesia, the market holds significant potential for global tech firms due to its large, tech-savvy population. However, Bhima Yudhistira from the Centre of Economic and Law Studies warned that these restrictions may deter foreign investment, creating what he calls ‘pseudo protectionism’ that could dampen investor sentiment in the region.
Toyota and Nippon Telegraph and Telephone (NTT) plan to invest 500 billion yen ($3.27 billion) by 2030 to create an AI-driven platform to reduce traffic accidents. Announced in a joint statement, the Japanese automaker and telecom giant aims to launch the platform by 2028, using extensive data to support driver-assistance technology. This project, initiated amid rising pressure on Japanese automakers to compete in the autonomous driving space, is expected to enhance safety features such as improved visibility in urban areas and smoother expressway merging.
The companies intend the platform to benefit not only their own operations but also government and industry partners, setting a long-term goal to minimise traffic accidents. Toyota and NTT, who first collaborated on 5G-connected car technology in 2017, see this project as part of a broader vision for zero-accident mobility, aiming for widespread adoption by 2030.
Toyota’s existing investments in autonomous technology include Woven by Toyota, a unit established in 2021 focused on AI mobility. Woven by Toyota is also developing the Arene automotive software platform and Woven City, a testing hub in Shizuoka. As part of these advancements, NTT and Toyota also plan to test self-driving technology as early as 2025.
The Biden administration is investing $825 million in a new semiconductor research facility in Albany, New York, as part of a broader push to bolster US chip production and reduce reliance on foreign technology. The Albany facility will serve as a primary hub within the National Semiconductor Technology Center (NTSC), which aims to accelerate advancements in chip design and manufacturing, supporting initiatives laid out in the CHIPS and Science Act passed in 2022. Senator Chuck Schumer, a key advocate for the Albany location, said the facility will advance US leadership in semiconductor technology and support high-tech manufacturing jobs.
The Albany site, based at the Albany NanoTech Complex, will focus on developing cutting-edge machinery to enhance chip production. Additional hubs for chip design and packaging will be announced soon. The complex will also feature a state-of-the-art ‘High NA’ machine from ASML, allowing chip makers to create densely packed semiconductors capable of advanced computing. Schumer believes this investment could make New York a significant chip production centre, with companies like GlobalFoundries, Micron, and Wolfspeed also planning expansions in the state.
The CHIPS Act allocated $11 billion for semiconductor R&D and an additional $39 billion for manufacturing subsidies, though the rollout of these funds has faced criticism for delays. Despite challenges, the Biden administration views this program as essential to sustaining growth in high-tech manufacturing, especially in areas like AI, while also reducing design and production costs for American companies. With Albany set to lead the charge, federal officials are hopeful this investment will help the US regain its competitive edge in the global semiconductor industry.
Big technology firms, including Microsoft and Meta, are significantly increasing their investments in AI data centres to meet soaring demand, but Wall Street is looking for quicker returns on these expenditures. Both companies reported rising capital expenses due to their AI initiatives, with Alphabet also indicating that its costs would remain elevated. Amazon is expected to follow suit in its upcoming earnings report.
This surge in capital spending could impact profit margins, causing concern among investors. Shares of major tech companies, including Meta and Microsoft, fell by around 4% in premarket trading, despite reporting better-than-expected profits for the July-September quarter. Analysts warn that while the race to build AI capacity is intensifying, it will take time for these investments to yield returns.
Microsoft’s capital expenditures for a single quarter now surpass its total annual spending from prior years. The company noted a 5.3% increase in spending, amounting to $20 billion, while also predicting further increases related to AI. However, they warned of potential slowdowns in growth for their Azure cloud business due to data centre capacity constraints. Similarly, Meta anticipates a “significant acceleration” in AI infrastructure costs next year.
The tech industry is experiencing bottlenecks, particularly as chipmakers like Nvidia struggle to keep up with the demand for AI chips. Advanced Micro Devices has also reported that AI chip demand is outpacing supply, limiting growth potential. Despite these challenges, both Microsoft and Meta maintain that it is still early in the AI cycle and emphasise the long-term benefits of their investments, echoing earlier experiences during the development of cloud technology.
Amid growing geopolitical tensions, Rick Tsai, CEO of Taiwan’s top chip designer MediaTek, emphasised the company’s commitment to regulatory compliance in a recent earnings call. Tsai acknowledged the complex challenges posed by international relations but reassured stakeholders that MediaTek’s strong compliance program is designed to uphold ethical standards across diverse markets. He added that the company “will not do, shall we say, strange things” and is focused on protecting shareholder interests.
Taiwan, home to leading semiconductor firms like MediaTek and TSMC, plays a pivotal role in the global tech landscape, supplying major players in AI, including Nvidia. However, the tech sector faces rising pressures as Taiwan grapples with increasing military threats from China, which claims the island as its territory. Additionally, the upcoming US presidential election adds uncertainty; candidate Donald Trump has criticised Taiwan’s impact on the US chip market, proposing tariffs on imports and suggesting greater restrictions on international tech firms.
MediaTek, a TSMC customer, also contends with existing US limits on partnerships with Chinese tech companies such as Huawei. Recently, TSMC suspended shipments to a client after finding a chip intended for a different product had reached Huawei. Despite these challenges, MediaTek’s stock has risen by 27% this year, reflecting investor confidence in Taiwan’s enduring role within the tech industry.
AMD’s shares dropped 8% on Wednesday as the chip giant’s revenue forecast fell short of investor hopes, despite strong gains from the AI-driven chip boom. The forecast suggests AMD’s AI chip sales could hit $5 billion by 2025, but CEO Lisa Su warned that production would struggle to meet demand, likely tightening supply through next year. This cautious outlook could see AMD lose up to $20 billion in market value, underscoring investor concerns.
Analysts noted that while AMD’s AI performance is promising, demand may outpace supply, raising risk for the company’s growth prospects. Stacy Rasgon of Bernstein observed that for an “AI name” like AMD, even modest guidance could raise eyebrows, especially with expectations for business “lumpiness” through 2025. Unlike AMD, Nvidia—a key AI chip competitor—showed little market impact, reflecting investor confidence in its supply stability.
AMD’s stock, up nearly 156% since late 2022, is now trading at around 32 times its forward earnings, slightly lower than Nvidia’s 36 times. Despite the recent dip, analysts still see upside potential, with the median target price set at $187.50, or about 13% above AMD’s last close.
OpenAI is collaborating with Broadcom and TSMC to develop its first custom-designed chip, while supplementing its infrastructure with AMD chips alongside those from Nvidia to meet high computing demands. OpenAI initially considered establishing its own chip-manufacturing network but set the idea aside due to costs and time requirements. Instead, the company is focused on partnerships and in-house chip design to reduce costs, similar to strategies from industry giants like Amazon, Google, and Microsoft.
Broadcom’s stock rose 4.5% following news of the collaboration, while AMD shares gained 3.7%. The partnership will leverage Broadcom’s experience in fine-tuning chip designs for manufacturing and secure production capacity with TSMC, aiming for the first in-house chips by 2026. OpenAI’s increased use of AMD chips on Microsoft’s Azure platform underscores the growing competition Nvidia faces in the AI chip market, where it currently holds over 80% market share.
With soaring expenses from training and deploying models, OpenAI is seeking to streamline operations and cut compute costs. Nvidia remains an essential partner for OpenAI’s advanced Blackwell GPUs, even as OpenAI expands its chip sourcing to support more affordable, efficient AI development.
