Tech giants Microsoft, Meta, and Alphabet are heavily investing in AI, but investor concerns are rising due to the colossal sums involved. Despite the potential for huge profits, the stock prices of Microsoft and Meta have fallen following announcements of increased AI spending. Alphabet, however, saw its stock price rise.

The companies are engaged in an AI race requiring significant financial resources and long-term commitment. This massive investment is pushing up the stock prices of companies that make essential computer chips, such as Nvidia and ASML.

Microsoft invested over three-quarters of its revenue in AI-related initiatives and plans to double its data center capacity in the next two years. Meta spent nearly $20 billion on AI last quarter, which is more than two-thirds of its revenue during the same period. Alphabet invested almost $24 billion in AI, about half of its available revenue from last quarter.

Analysts express concerns about the scale of the investments and the potential for disappointing returns. There are also concerns regarding circular investments within the AI sector, where companies invest in each other, possibly inflating stock prices artificially.

Google CEO Sundar Pichai has mentioned billions of dollars in quarterly revenue from AI services for businesses. Whether the current high stock prices, driven by AI optimism, are sustainable or indicative of a bubble remains uncertain.