Big Tech's AI costs draw attention

Microsoft and OpenAI's deepening partnership helped to set off an AI race, but the resulting investor euphoria could be giving way to more discerning questions.

Driving the news: “Given the exorbitant costs associated with the development, hosting and serving of AI products, many investors are concerned about the potential for [fiscal 2024] commentary regarding a material increase,” says Jefferies research analyst Brent Thill in a preview of the company's latest earnings slated for tomorrow afternoon.

State of play: AI announcements alone may not be enough to impress Wall Street, which has already sent names in the sector soaring.

• Since announcing a $10 billion multiyear investment in OpenAI in January, Microsoft has seen its own shares rise over 44%.
• Google parent company Alphabet, which reports earnings alongside Microsoft tomorrow after the bell, is up 36%.
• Meta, which reports Wednesday, has seen its stock pop 133% year to date, while Apple is up 54% and Amazon is up 50%.

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