This week, Microsoft, Alphabet, Amazon, and Meta are expected to report brisk revenue growth for the July–September quarter, according to data from LSEG. The companies are also likely to reaffirm plans to spend hundreds of billions of dollars building AI infrastructure — even as industry leaders and investors voice concerns that expectations have raced ahead of reality.
Warnings of Overheating
Figures such as OpenAI CEO Sam Altman, Amazon founder Jeff Bezos, and Goldman Sachs chief David Solomon have in recent months warned that the AI boom risks becoming detached from business fundamentals.
Many investors are growing cautious, adopting dot-com era playbooks to avoid overexposure to overheated AI stocks. The nervousness reflects unease over whether Big Tech’s spending spree can deliver sustainable returns — or whether another speculative bubble is forming.
$400 Billion in AI Spending, Uncertain Payoff
Between them, the leading cloud and technology firms are expected to spend about $400 billion on AI infrastructure this year alone. Yet early returns remain uneven.
A widely cited MIT study found that among more than 300 AI projects analyzed, only around 5% produced measurable performance gains. Most, the study noted, stalled at the pilot phase due to weak integration, poor scalability, or lack of clear business cases.
Even insiders are voicing skepticism. “Overall, the models are not there. I feel like the industry is making too big of a jump and is trying to pretend like this is amazing, and it’s not,” said Andrej Karpathy, OpenAI co-founder and Tesla’s former AI head.
The uncertainty could have wider economic implications. Since ChatGPT’s debut in November 2022, AI enthusiasm has added roughly $6 trillion to the combined market value of Big Tech. Some economists warn that this rally has been propping up the U.S. economy, offsetting the drag from lingering trade tariffs.
Circular Deals Raise Systemic Risks
Adding to the anxiety are complex cross-funding deals among AI leaders — arrangements that some analysts say recall the mutual dependencies of the 1990s dot-com bubble.
Reports suggest Nvidia may invest $100 billion in OpenAI, one of its biggest customers, while OpenAI itself has signed AI compute contracts worth $1 trillion, including a $300-billion commitment to Oracle.
Debt financing is also becoming more common. Meta recently secured a $27-billion private-credit deal from Blue Owl Capital to fund its largest data center — a sign of how far firms are stretching to keep pace with AI demand.
“When the same companies are both funding and relying on each other, decisions may no longer be based on real demand or performance — but on reinforcing growth expectations,” said Ahmed Banafa, engineering professor at San Jose State University. “When that becomes the norm, it increases systemic risk.”
Optimists Still See Real Value
Still, not everyone believes the AI boom is a bubble. Some investors argue that beneath the market froth lies genuine transformation.
“Adoption may be low right now but that’s not a forward indicator,” said Eric Schiffer, CEO of Los Angeles-based Patriarch Organization, which holds shares in all the “Magnificent Seven” tech firms. “With greater spend and greater innovation, adoption is going to grow. I don’t think we’re at a bubble stage yet.”
Indeed, Big Tech’s financial strength remains formidable. Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are expected to report robust revenue increases, even as capacity constraints limit how fast they can meet AI demand.
According to Visible Alpha data, Azure revenue likely grew 38.4% in the quarter, ahead of Google Cloud’s 30.1% and AWS’s 18%. Overall, Microsoft’s total revenue is projected to rise 14.9%, Alphabet’s 13.2%, Amazon’s 11.9%, and Meta’s 21.7%.
However, profit growth is expected to slow for most of them due to surging capital and energy costs — with all but Microsoft likely posting their weakest profit increase in 10 quarters.
The Week That Could Define the AI Era
As Microsoft, Alphabet, and Meta release results on Wednesday, followed by Amazon on Thursday, investors will be watching closely not only for earnings, but for guidance on future AI spending.
Whether this week’s results confirm a solid foundation or expose cracks beneath the hype may determine if the AI boom continues — or if the market is heading toward its first true AI correction.