How much money should companies lavish on artificial intelligence? American tech giants think the answer is: a lot. Their capital spending on data centres may surpass $740bn this year, according to Bloomberg Intelligence, a research firm. Investors, who used to agree, are having second thoughts. When on July 26th it emerged that Nvidia was in talks to underwrite $250bn of a gargantuan $500bn-plus data centre, stuffed full of its chips and run by Openai, a leading model-maker, its share price tumbled. Days earlier investors blanched when Alphabet, Google’s parent company, said it would boost its ai spending to $205bn this year. ai stocks in Japan, South Korea and Taiwan have plummeted, too.
The American ai splurge looks especially profligate compared with Chinese parsimony. In 2026 Chinese tech titans are forecast to invest less than a tenth as much in data centres as their American counterparts (see chart). Their models appear only fractionally less powerful owing to this frugality. K3, an advanced model launched last month by Moonshot ai, a Beijing-based startup, is 95% as clever (on widely used benchmarks) as Fable 5, a frontier model from Anthropic, another top American lab. It is also 70% cheaper to use. On August 3rd Alibaba, a Chinese tech giant, released a model which reportedly scored among the world’s best by some measures.
ECONOMIST