Microsoft’s warning to shareholders: “It will cost hundreds of billions to keep up with the AI frontier . . . “

Photo above - Ford's long abandoned "St Thomas" assembly plant. Not that long ago auto factories were the Data Centers of their era, powering America's unlimited future and economic domination.

Stop it, Microsoft – you’re driving me crazy. Your stock (MSFT) is only up 4% this year. Your PE ratio (price to earnings) is 34, almost 50% higher than the market average. You promise a massive uptick in earnings, if we agree to a massive increase in data center construction.

Microsoft's dream is to bury Google, Amazon, and all the other behemoths of AI. More data centers! More and bigger! Giant computers to analyze published on the internet to make Microsoft's algorithms smarter than everyone else's.

Which is exactly the same strategy everyone else has.

As a Microsoft investor (owner through SPY mutual fund shares only) I want to ask questions. What is “the AI frontier” you invoke as you gaze upward? How does it make money for you? You’re not making any money from Co-pilot – you give it away free. I have to turn Copilot off whenever I want to do write something. Copilot always wants me to stop reading, writing and thinking for myself. Copilot always assumes it can do anything better. Suitable for 8th.graders doing American History homework maybe

Evidently most of Microsoft's eggs (for future profits) are in their AI advertising basket. Does this mean we will see more spam, emails, popups, text messages etc? There’s a recession coming, and I’ll probably have less money to spend on consumer goods. Even without AI putting me on the street to look for a new job.

If this is only about homework assignments, AI generated illustrations, and upping the velocity and volume of advertising, I don’t want to spend billions. In fact, I’m afraid that at some point AI is going to tank the entire S&P 500 index. The 5 largest companies in S&P index make up 30% of the entire value. And they are all screaming "A!" at the top of their voice.

Ford was the biggest automaker on earth, until it wasn’t. Other carmakers, with innovative ideas, started eating Ford's lunch. Ford probably pleaded for billions in more money, for factories and research. Today Ford's is only worth about $50 billion. Bigger than Dollar Tree, but behind PayPal. Ford used to be number 1. No amount of assembly line construction can fix stuff like this.

I’m just sayin’ . . .

Full disclosure – this writer owns no shares directly of any of the companies mentioned in this column. But they are components of the SPY mutual fund which I am invested in.

Microsoft AI CEO Mustafa Suleyman says it will cost 'hundreds of billions' to keep up with frontier AI in the next decade