Image source, Reuters Image caption, Leaders of tech companies Meta, Amazon and Google all reported quarterly financial results in in recent days
The world's biggest technology companies - including Microsoft, Meta, Google, Apple and Amazon - updated Wall Street this week on their finances.
One common thread emerged: they are all planning to continue spending massive amounts of money on artificial intelligence (AI).
The reaction from investors was that they need to see more tangible results to show for the $1tn (£743bn) and growing , external investment in things like computer chips, data centres, and even technical staff. That sent some tech stocks on a wild ride in recent days.
While each company operates in different sectors, their AI spending and plans showed they have a few other things in common as well.
OpenAI's release of ChatGPT in late 2022 kicked off the ongoing AI investment race, and every major tech company has since launched a consumer-facing AI chatbot of their own. Meta has Meta AI, Google has Gemini. Amazon has Rufus. Apple even relaunched Siri.
Yet, none of the chatbots or the related tools in and of themselves clearly provide a meaningful amount of revenue for the companies, despite being costly to create.
Instead, this batch of earnings results made clear that companies like Google, which is owned by Alphabet, and Meta are currently spending much more money related to AI tools than they bring in.
Both companies reported some of their lowest ever amounts of free cash flow, a measure of how much money a business has left over after paying for operations and investments.
Google spent so much money on AI that Alphabet's free cash flow was negative on revenue of $118bn, meaning it spent more than it brought in for the first time in the company's history as a public company.
Meta's free cash was just $784m on $61bn of revenue, meaning it spent almost as much money as it made during the quarter.
Meta's Reality Labs, which is responsible for its AI work, lost nearly $9bn in the first half of this year.
Look no further than Wall Street's reaction to Meta's quarterly results to see that investors are no longer placated with executive's claims that AI investment will turn out to be worth it at some unknown point in the future.
Shares of the social media giant plunged to its second lowest level in a year after chief executive Mark Zuckerberg said Meta was working on its own AI agent, or an AI chatbot that can operate somewhat autonomously. And that it was planning to develop an operation to sell an an AI tool directly to other firms.
Neither the operation or the AI tool currently exist in a way that could make Meta money, and Zuckerberg gave no timeline for when they would materialise. Still, Meta increased the low end of its planned spending on AI – it is likely to pour more than $140bn into AI this year alone.
Meanwhile, shares in Microsoft soared to a six-month high. Despite the company's plans to effectively match this financial year the $190bn it spent on AI over the last 12 months, it showed strong revenue growth and more adoption of its core AI tool.
Tracy Woo, an analyst with Forrester, said Microsoft was a tech company showing that its massive AI investments were "beginning to deliver returns."
The market reaction to Amazon was almost identical. Despite negative cash flow, and plans to spend $220bn on AI this year, the success of its other businesses dr…