MarketWatch: A new report from Cambridge, MA-headquartered independent research boutique Forrester Research scrutinized the financial health of the major AI players and concluded that while a bursting of the AI bubble is not imminent, signs of strain are showing. Their research illustrates that until September nearly all of the capital investment was paid for through operating cash but since then, the cushion is wearing thin. For example, Amazon spent $77 billion versus $42 billion of cash. Alphabet blew $9 billion more than available cash, Meta by $1.12 billion and both companies sold shares to raise capital in the last few months. Microsoft is still spending its own cash but borrowed money anyway through a filing ro raise $25 billion in bonds. More worryingly, on the fringes of this cohort Oracle spent $1.61 per operating dollar in the year to August. The Forrester report, lead-authored by Brian Hopkins, defines a bubble as “supply built ahead of demand”. They estimate U.S. GDP needs to rise by 5% by 2035 to justify the current level of infrastructure investment.
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