Gary Marcus thinks big tech companies are investing a lot of money into AI.
The researcher and author used Wednesday’s strong earnings as an opportunity to criticize hyperscalers’ capital spending plans and take aim at Alphabet, Amazon, Metaplatform and Microsoft, which are spending huge sums to further their AI ambitions.
In a post on X on Thursday, he called the company’s AI capital investment plans “the biggest capital allocation error in history.”
Marcus highlighted the four companies’ history of AI investment and highlighted the trend of the top four hyperscalers setting records in each earnings report starting in 2022. Similarly, Wall Street has largely rewarded these companies, but has shown signs of fatigue in recent quarters.
“Amazon, Google, Microsoft, and Meta together spend more money than the Manhattan Project.” monthly“It’s more than 12 times the Manhattan Project every year,” he said.
Meta CEO Mark Zuckerberg reiterated that spending billions of dollars is a necessary cost to keep up with the superintelligence phase of the AI boom. But until that happens, as Marcus pointed out, such high spending levels are not currently yielding significant returns for investors.
“No company is making a lot of money from AI,” he says. “No company has a technological moat. Massive price competition is inevitable. And very few customers get a significant return on their investment.”
Marcus has previously warned of the dangers AI mania poses to investors. In February, as the AI trade struggled amid unexpected disruptions, he said the technology sector’s struggles at the time showed investors were realizing they had been sold “a commodity” when it came to AI.
“My guess is that these stock prices and OpenAI’s reputation will fall further, but it’s already clear that the rocket will not reach the altitudes that many expected in any case,” Marcus wrote.
Some of those concerns were reignited this week by a Wall Street Journal report that said OpenAI missed some of its key revenue and user growth goals last year. Tech stocks fell in trading as investors grappled with the possibility of a slowdown in demand.