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

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whowasthatmaskedman · 70-79, M Best Comment

I have no faith in the Wests AI bubble. I suspect the Chinese are waiting behind every door already with the next generation. AI is the obvious next gen economic weapon..😷

Thank you for the Best Comment and Merry Christmas

ArishMell · 70-79, M

@whowasthatmaskedman An awful prospect but I fear you have a point there.

China is proving herself becoming more advanced technically than the USA and many European countries; in computing yes, but many other areas too.

That is becuase not only has she a hard-line, ambitious single-party governance; but, I learnt only recently, many of the Politburo are professional scientists and engineers. Most Western politicians seem to have little or no technical background, although there are a good few medical people among them.

whowasthatmaskedman · 70-79, M

@ArishMell The past 20 years they have run a massive computer science and engineering university building scheme, staffed in the first place by head hunted best practice people with unlimited funds. Those graduates are now replacing the imports and leapfrogging in research over their teachers, unrestricted by committees, budgets and ethics restrictions. They may already have cloned the first human and we would never know..Failures wouldnt even slow them down..😷

ArishMell · 70-79, M

@whowasthatmaskedman No, they'd learn from their failures.

What worries me is these technical developments being used to concentrate vast amounts of economic hence social and cultural power not in governments though that is happening too, but in the hands of the very few, extremely wealthy American business-men who have basically taken over the Internet.

whowasthatmaskedman · 70-79, M

@ArishMell There is that of course.. But dont put it past the Chinese to hijack the internet and form an alternate core somehow, cutting the Americans out of the system if they become a problem..😷

ArishMell · 70-79, M

@whowasthatmaskedman No, I would not put it past it past them at all. I believe China already has a massive firewall to stop its citizens seeing anything the CCP does not want them to see.

whowasthatmaskedman · 70-79, M

@ArishMell And their social credit scheme is a model that I am sure we will eventually see copied here..😷

SusanInFlorida · 31-35, F

@whowasthatmaskedman china is struggling to make "next gen" chips. this is why they are constantly threatening to invade taiwan, and holding war games over their air space. upon invasion they will steal all the TMSC patents/tech secrets.

i am concerned about chinese spyware. and their ability to turn off our internet, cell phones, gps, banking, and electricity by flipping a switch.

world war 3 will be found electronically, not with nuclear weapons.

whowasthatmaskedman · 70-79, M

@SusanInFlorida Everyone struggles with everything at first. I could go through the story about how being "the best" doesnt count as much as the greatest value and the largest quantity. Not everyone needs the best. And the Chinese can afford to buy anything they really need..
America didnt win WW2 with the best of everything. They won it with the MOST of everything and kept coming..😷

22Michelle · 70-79, T

@whowasthatmaskedman Probably more likely those American billionaires will cut the USA out - See a certain Mr Trump!

SusanInFlorida · 31-35, F

@whowasthatmaskedman whenever i see something advertised on an expensive broadcast program (cost per minute of advertising), my immediate impulse is . . . I probably can't afford this. They have huge advertising expenses to promote their BMW, auto insurance, cruise ship, hotel . . .

the advertising cost for luxury goods and financial services can exceed 10% of total product cost in some cases.

whowasthatmaskedman · 70-79, M

@22Michelle I agree. the US$ as a currency of convenience has almost run its course. The irony being that the people hurt the most will be the criminals and dictators who do have shipping containers full of notes they cant exchange for something else. It could halve in real value in a year or two..😷