AI gets a pass on cost cutting

Hi, it’s Alex in Los Angeles. Artificial intelligence has already come for some jobs, and Wall Street is happy about it. But first...Today’s [View in browser]( [Bloomberg]( Hi, it’s Alex in Los Angeles. Artificial intelligence has already come for some jobs, and Wall Street is happy about it. But first... Today’s must-reads: • Peter Thiel [won’t donate to candidates]( in 2024 • Microsoft’s $69 billion [takeover of Activision Blizzard]( was vetoed by Britain’s antitrust watchdog • SpaceX’s Starship [test launch]( from southern Texas sparked a 3.5-acre fire AI is taking jobs (but not the way you think) It’s a time of austerity for Big Tech — quite the conundrum for companies expected to remain at the forefront of innovation. And from this tension between investing in the future and counting pennies, a new battle of man versus machine has emerged. The [AI arms race](bbg://screens/ni%20ai) is on, and it’s being funded by the dollars saved through firing employees. The word “AI” was uttered more than 200 times on earnings calls by Meta Platforms Inc., Alphabet Inc. and Microsoft Corp., which all delivered their results this week. It’s the one area where executives are emphatically promising to spend gobs of cash — on expensive servers and infrastructure to run the technology, and on building it into tools for users, clients and employees. Those commitments have followed breathless updates on spending cuts, primarily through the elimination of more than 40,000 jobs from those three companies in recent months. “We remain committed to delivering long-term growth and creating capacity to invest in our most compelling growth areas by re-engineering our cost base,” Alphabet Chief Financial Officer [Ruth Porat](bbg://people/profile/2536317) said in an interview this week. That’s corporate speak for: We’re taking money away from things that we don’t think will make us a more valuable company and giving it to the things that will. Artificial intelligence isn’t the only thing that’s still attracting cash. Alphabet is also placating shareholders with billions of dollars in buybacks. Its new $70 billion share repurchase program ties last year’s as the biggest in company history — and matches what the search giant spent on R&D and capital expenditures last year. A less compelling use of Alphabet’s cash? The 12,000 people that the company fired in January. Or the office space to house them. Meta’s selling a similar story. According to investors, who drove the stock up 12% after its earnings release, the company’s so-called Year of Efficiency is off to a fantastic start. Like Alphabet, Meta has slashed jobs. And like Alphabet, it’s offered generous buybacks. The company announced a $40 billion share repurchase plan in February, on the heels of the $50 billion authorized 16 months earlier. Meta executives spent much of the call talking about how they’re infusing AI into the whole business. Much of the company’s capital expenditures are going to infrastructure for existing artificial intelligence work, like the algorithms that recommend content on Facebook and Instagram, and building systems for generative AI technology. Meanwhile, it’s chopping its spending expectations, capping it at $90 billion. That’s $11 billion less than the company’s estimate before it decided to eliminate 21,000 employees. “It’s very hard to penny-pinch your way to the top,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, “leaving Meta walking a very fine line between keeping the lights on and making the future bright enough to excite investors.” That said, giving money back to shareholders seems to be buying these companies time while they figure out the future. While Microsoft didn’t have a fresh new buyback plan to offer, its chief financial officer, [Amy Hood](bbg://people/profile/18040963), did say it’s “committed to leading the AI platform wave and making the investments to support it.” In addition to laying off 10,000 workers this year, Microsoft also vowed to keep operating expenses in check. It’s a fascinating trade-off for technology companies that have long been known to stockpile talent, if only to keep the smartest tech minds away from competitors. But with cash tight, the message is clear: Big Tech thinks it’s worth spending money on the machines – not so much on the people. So while a robot may not be taking over your job responsibilities, AI might still take your job. —[Alex Barinka](mailto:abarinka2@bloomberg.net) The big story How Asia’s hottest new app was sunk by secret China connections. Bondee was booming in January when users thought its developer was from Singapore. Then they [found out about its roots](. Get fully charged Amazon is pulling the plug on its line of Halo health devices as Chief Executive Officer Andy Jassy seeks to [wind down marginal programs](. A group of YouTube contract staff in Texas have unanimously voted to unionize in a labor victory that [could force Alphabet to collectively bargain]( with US workers for the first time. The CEO of the cybersecurity firm Mandiant discussed the state of the AI arms race [on Bloomberg TV](. More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends Follow Us You received this message because you are subscribed to Bloomberg's Bloomberg Tech Daily newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](