The Gold, the Shovels, and the Switch: Looking Forward at Big Tech’s AI Cap-Ex Build-Out without the Existential AGI Bet

The platforms aren’t gambling on AI—they are trying to tax it. The labs dig for gold while clouds sell shovels and give away the map. If anyone is going to profit from AI infrastructure, it’s the effective platform monopolist incumbents. The rest are highly likely to discover that “core AI” is a product with negative margins and fickle users. Or, to put it bluntly: This is nuts! When’s the crash? Unless Sam Altman’s ChatGPT or Elon Musk’s GrokAI or Dario Amodei’s Claude or Demis Hassabis’s Gemini really does become DigitalGod…

Now comes:

Rob Armstrong: Big Tech’s AI business models <https://ep.ft.com/permalink/emails/>: ‘We’ve looked at charts like this before:
Unhedged’s argument has been that the market, far from blindly throwing money at AI and Big Tech, is making distinctions… based on cash generation…. The market has lost patience with Oracle and Meta. Might the same happen to the other three before long?…

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And he then sends us to Andy Wu:

Andy Wu: Should U.S. be worried about AI bubble? <https://news.harvard.edu/gazette/story/2025/12/should-u-s-be-worried-about-ai-bubble/>: ‘They [the five] positioned themselves well to benefit from the rise of AI, but they don’t stand to lose that much if AI [tanks]…. Microsoft has mostly outsourced… to… OpenAI…. Amazon will support anybody’s AI model . . . Meta spent billions of dollars building an open-source AI model…. [They] don’t really think that core AI technology is a meaningful business…. Instead, they’re focused on profiting from… adjacencies…. OpenAI, Anthropic and xAI are out there digging for gold. Nvidia is the consummate shovel seller…. Meta is the consummate jewellery maker… social media, advertising, wearables and metaverse businesses stand to benefit…. Microsoft does a bit of shovel selling and jewellery making, but the key thing is they’re not stuck digging for gold…. Amazon and Microsoft and Google might make less money on their cloud computing than they ideally would like if AI growth slows or declines, but they would not end up in financial distress…

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Rob then writes:

We might sum up Wu’s view[:]… Big Tech’s data centre spending is significant… [but] core business models… remain “virtual”…. They are not making an existential bet on AI; they are spending to make sure that their core businesses can coexist with AI, should they need to…. Those core businesses should still be valued on high multiples of cash flows…