The AI boom has unleashed an unprecedented wave of spending, with technology companies committing hundreds of billions of dollars to AI infrastructure, data centres, chips, and startups. But amid this investment frenzy, one key question remains: where is all the money actually going?
Today's AI spending wave can be traced back to OpenAI's ChatGPT moment.
It launched ChatGPT in November 2022 (though its groundwork was laid years earlier). At the time, the tech industry was facing slowing growth, and ChatGPT changed that almost overnight, giving Big Tech a compelling new story for investors: artificial intelligence was the future. Microsoft, Google, Amazon, and Meta all announced huge AI infrastructure plans and began spending billions of dollars on AI data centers and chips.
Meanwhile, OpenAI's success led to the launch of several similar AI labs, and investors poured money into them to avoid missing the AI boom.
The investment wave has only gathered momentum. According to business and technology research firm Gartner, worldwide spending on AI is projected to reach $2.52 trillion in 2026, up 44% from the previous year.
Despite all the optimism, if you remove the term AI from the equation, this all seems a little ludicrous. More than $16 billion was invested in startups, on top of over $150 billion in capital spending by the end of 2023, just because a single website had been very popular, as per Ed Zitron, reasearcher and AI critic
And who made the money, really – the startups? No, it's the companies that own the infrastructure.
AI startups pay OpenAI or Anthropic for AI services. Those companies pay Microsoft, Google, Amazon, Oracle, or CoreWeave for cloud computing. Those cloud providers then buy chips from Nvidia and Broadcom, which in turn rely on manufacturers like TSMC, SK Hynix, Samsung, and Micron.
“The real thing to watch isn't any single company, it's the loop – how money keeps circulating within the AI industry,” says Viram Shah, Founder and CEO, Vested Finance, while speaking to LiveMint, and adds, “OpenAI alone has commitments of roughly $1.4 trillion against today's revenue of roughly $13 billion. That gap is what makes people nervous, and honestly, it's fair to be nervous about it.”