2 weeks ago
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Reuben Gregg Brewer, The Motley Fool
Sat, August 8, 2026 astatine 9:35 AM CDT 3 min read
The blistery exertion of the time is artificial quality (AI). It is apt to alteration the satellite the aforesaid mode that the net did astatine the crook of the century. Companies similar Amazon (NASDAQ: AMZN) are spending monolithic sums of wealth to physique AI businesses. At past count, Amazon's 2026 AI spending plans totaled $220 billion. There appears to beryllium unlimited request for AI, truthful spending connected gathering AI infrastructure is going done the roof. But volition each of that spending wage off?
What did Amazon conscionable denote astir AI spending?
When Amazon reported its second-quarter 2026 results, it announced that it accrued its AI spending to $220 billion, up $20 cardinal from its February estimate. According to the company, that fig was pushed higher by rising costs for representation chips. That's a 10% summation successful little than six months, with the institution showing nary involvement successful slowing down. Even astatine the existent spending rate, it believes it won't person capable artificial quality capableness to support up with demand.
Missed Nvidia successful 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" awesome flashed for a little-known chipmaker called Nvidia. For the archetypal clip successful years, that aforesaid "Total Conviction" awesome is flashing for a institution 1/100th the size of Nvidia. Continue »
This sounds similar an astonishing concern for a institution to beryllium in, but determination are caveats that investors request to consider. The astir important 1 astir apt comes from looking astatine the large picture. By immoderate estimates, AI spending has accrued 500% since 2022. That's a humanities look astatine what has already been spent utilizing Census Bureau statistics, with the information suggesting exponential growth. Amazon's AI update suggests that aboriginal spending volition beryllium adjacent higher.
If you person been investing agelong capable to retrieve the dot-com boom, past you retrieve the immense spending that went into gathering retired the internet. The spending astir AI is eerily reminiscent of that period, which ended successful the dot-com bust. There are already worrying antagonistic impacts from the existent circular of exertion spending.
No inclination lasts everlastingly
Notably, the summation successful AI spending that Amazon conscionable announced was driven by rising representation spot prices. Electricity request is strained arsenic well, a information that is hitting people's wallets crossed the country. Demand for AI isn't apt to beryllium infinite immoderate much than it was for the internet. Which means that eventually, companies similar Amazon volition apt find they've overspent connected the AI build-out. If the dot-com bubble's burst is immoderate indication, erstwhile the overspending becomes apparent, companies similar Amazon could suffer.
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