Technology companies are spending big to incorporate artificial intelligence into their businesses and to build huge data centers. Investors who had jumped on the bandwagon appear to be having second thoughts.
Proponents of artificial intelligence see it as the next great revolution for the global economy. The revolution won’t come cheap. Just four companies — Alphabet, Amazon, Meta Platforms and Microsoft — plan to spend up to $720 billion this year, primarily on AI data centers. Anthropic filed paperwork Monday for what could be the biggest initial public offering of stock ever, even as its top executive warns that advanced AI could pose an existential threat to humanity.
Microsoft has offered 60,000 employees, or about 27% of its global workforce, voluntary buyouts as the software giant spends heavily on artificial intelligence. The company’s voluntary exit offer was available to eligible employees in Canada, India, the United Kingdom and the United States, the company’s Chief People Officer Amy Coleman wrote in a blog post Monday.
The company, which releases its quarterly financial results Wednesday, had approximately 223,000 full-time employees at the end of June. In May, Microsoft planned to offer buyouts to about 8,750 people, or 7% of its U.S. workforce, according to two people familiar with the plan who were not authorized to speak about it publicly. In July, the company said it was cutting 4,800 jobs, about 2.1% of its global workforce, including a large number of workers at its Xbox video game business.
The gusher of investment in data centers — likely topping $700 billion this year — to power artificial intelligence has made memory chips, computer processors and other equipment, as well as electricity, more expensive. Economists expect it will continue to push up inflation at least through the end of this year.
Microsoft has been ramping up its AI capabilities for several years. In 2024 the company revealed a new class of AI-imbued personal computers that centered on fusing its AI assistant, called Copilot, into the Windows operating system for PCs, where Microsoft already has the eyes of millions of consumers. And in October 2025 Microsoft introduced a new artificial intelligence character called Mico, a floating cartoon face shaped like a blob or flame that embodies the software giant’s Copilot virtual assistant.
And in October 2025 Microsoft introduced a new artificial intelligence character called Mico, a floating cartoon face shaped like a blob or flame that embodies the software giant’s Copilot virtual assistant.
Formed in 2021 by former OpenAI leaders, Anthropic is locked in a fight for dominance with that company. But they have plenty of other competitors, including Google, newer startups in the U.S. and China and SpaceX, which has an AI business. Anthropic, OpenAI and SpaceX’s AI division have all been losing more money than they make because of the huge costs of resources in building AI, fueling concerns of a bubble.
The need for cash may explain why Anthropic is rushing to tap public markets this year, and not waiting until next year, as is OpenAI’s plan. Adding to the pressure is the possibility demand for AI shares could drop, or even collapse. Investors have become jittery about the massive financing needs of the sector, and several tech companies have pulled IPO plans recently.
Still, tech companies’ race to invest in the expansion of AI infrastructure could ultimately be sowing the seeds of future oversupply, according to Philip Straehl, chief investment officer at Morningstar Wealth.
“Periods of elevated capital investment have historically not translated into strong outcomes for investors, leaving us cautious on the outlook,” Straehl wrote in a report last week.
He expects that the rapid expansion of AI computing power will weigh on pricing, hurting companies’ returns and eventually result in a pullback in investing. Semiconductor companies are “particularly exposed to this dynamic,” Straehl wrote.
Surce AP.
