The Information · Tech & AI
TIER 4 Fri, 08 Aug 2025 22:05:29 +0000
How much financial stress can tech companies handle in their efforts to win the artificial intelligence race?͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ | | | | Aug 8, 2025 ---|--- | # The Briefing --- | | By Martin Peers ---|--- * * * | | _Thanks for reading The Briefing, our nightly column where we break down the day’s news. If you like what you see, I encourage you tosubscribe to our reporting here._ * * * Greetings!How much financial stress can tech companies handle in their efforts to win the artificial intelligence race? OpenAI CEO Sam Altman said today on CNBC he thinks the ChatGPT creator should continue “running at a loss” so it can continue to invest in computing capacity to keep advancing its AI models. In one way, he has to take that stance: He’s competing with rich companies, like Google and Meta Platforms, that have lucrative businesses to fund their development. But as AI-related capital expenditures rise, there’s surely a limit to what even those deep-pocketed companies can spend. Take Meta, whose cash balance dropped $30 billion—or 40%—in the first half of this year, as its spending on AI skyrocketed.Meta is, arguably, making the biggest gamble of any of the big tech companies. Apart from the fact that it’s a smaller business than either Google or Microsoft—measured by revenue—it doesn’t have a cloud operation that sells AI-powered services to companies. Both Google and Microsoft are building data centers to serve their AI cloud customers. Meta is investing nearly as much on capex, including for new data centers for AI—but for what purpose? Zuckerberg has talked about delivering “personal superintelligence to everyone,” whatever that means. Sure, AI will underwrite improvements in Meta’s advertising business, but it’s highly debatable whether the ad growth that results will generate enough of a return to justify the massive investment.Not that anyone on Wall Street cares about that issue right now. Meta’s recent performance has been solid—22% growth in the second quarter. Analysts are optimistic that performance will continue for years to come. Their consensus estimate is for revenue to grow from a projected $195.8 billion this year to $362 billion in 2030, according to S&P Global Market Intelligence data. That revenue expansion, analysts believe, will be more than enough to cover capex they estimate will run well above $100 billion from 2027 on (compared with the company’s projection for this year of up to $72 billion). Is the revenue growth projection credible? Ad giant WPP projects that global social media ad spending will expand by $142.6 billion through 2030, which is $23 billion _less_ than analysts expect Meta’s revenue alone to grow in the same period. (And WPP’s projection includes spending for some smaller ad categories that don’t involve Meta.) For Wall Street analysts to be right, Meta would have to take _all_ of the growth in social media advertising, and then some, in the next five years. Perhaps analysts are assuming Meta’s smart glasses really take off, but that’s a lot of Ray-Bans it would have to sell.Any meaningful shortfall in Meta’s revenue in this time frame could have drastic effects, likely shrinking the company’s cash reserves and forcing it to borrow to fund its AI ambitions. This brings to mind a Wall Street Journal column last weekend, which pointed out the risks that the AI boom will “[drain] American corporations of cash.” In placing his bet on AI, Zuckerberg is making an enormous gamble. Let’s hope for his sake it doesn’t blow up in his face. ### The Information’s Stories of the Week Jensen Huang is one of the most fascinating people in tech—the founder of Nvidia, whose chips are helping drive the AI revolution. In this weekend piece, we profiled his two children, who are now working at Nvidia: Madison and Spencer Huang. Is this a rare tech family dynasty in the making? Check out the piece.The crypto treasury stocks—companies like Strategy, whose main purpose has become buying and holding bitcoin—have been a hot investing phenomenon. But there are signs of a pullback, we reported.AI-powered coding tools are all the rage in Silicon Valley, but the startups behind them have to grapple with the enormous costs of paying for the AI models they rely on. In this piece, we revealed the financial details of some of these companies, such as Replit. And in this financial analysis piece, we looked skeptically at their high valuations.Advertisers and publishers have a love-hate relationship with Google, as we explained in this piece, which looks at how Google is maintaining search ad revenue growth despite changing search behavior.On the AI dealmaking front, we revealed that AI video startups Runway and Luma are both in talks to raise money (and here’s another angle on video startups).…Reflection AI, which aims to build open-source large language models, is in talks to raise more than $1 billion.…Cognition, an AI coding startup, offered buyouts to the employees it acquired in its Windsurf takeover, we revealed.…And we scooped that Meta acquired AI audio startup WaveForms AI. It was a big week for OpenAI, which released both its first open-weight LLM since 2019, and GPT-5, a long-awaited update to its flagship model. See our coverage here.This week on TITV, we interviewed some big names, including Uber CEO Dara Khosrowshahi and venture capitalist Keith Rabois. Transcripts of those interviews are here and here. ### In Other News • Intel CEO Lip-Bu Tan told employees he is committed to “advancing U.S. national and economic security,” after President Donald Trump called for him to step down due to conflicting interests with China.• Shares of ad technology firm The Trade Desk dropped more than 35% on Friday, as investors responded to the company’s projection that its revenue growth would slow to 14% in the third quarter, from 19% in the second quarter. The slowdown is a result of economic uncertainty flowing from Trump’s tariff plans. ### Today in The Information’s TITV Check out today’s episode of TITV, in which we unpack whether GPT-5 lives up to the hype. ### Recommended Newsletter Dealmaker was named the “Best in Business” newsletter for its insightful coverage of private technology and the AI hype cycle. Start receiving the newsletter here. | ## New From Our Reporters | | #### Crypto’s Red-Hot Stock Trade Shows Signs of Cooling By Yueqi Yang ---|--- --- | TITV Exclusive #### Khosla Venture’s Rabois on How AI Is Changing Everything About Startups By Jessica E. Lessin ---|--- --- | The Big Read #### Nvidia’s Quiet Rising Stars? 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