Taking stock: Is AI burning cash?

**Will Bain** (0:03)
Hello, I'm Will Bain, and welcome to Business Daily, where today we're taking stock of a week in which a raccoon with a shortened spine seemed to completely take over the internet.
Yes, Jimothy, the Seattle raccoon has spawned artwork, baked goods, and even that song. We here today are going to desperately strive for even a percent, I think, of his popularity with our panel, Nga Pham back with us, journalist in Hanoi, Vietnam, and Takara Small, tech columnist, joining us from Toronto, Canada. Great to have you both back with us. Takara, being someone who's kind of in the capital of raccoons, has he been filling up your feed this week?

**Takara Small** (0:48)
It has, and I will say garbage pandas hold a very sweet spot in many people's hearts. So seeing that it's managed to capture attention from the south of the border, it's like the cherry on top of the sundae.

**Will Bain** (1:00)
Nga, has he gone global, Jimothy the raccoon? Have you seen him in Vietnam?

**Nga Pham** (1:03)
Yes, yes, I saw. And it's a new competition to my favourite pick me hippo, the Moo Deng from Thailand. So I've got it as a screen saver. Now I have the new raccoon.

**Will Bain** (1:14)
Viral animals, definitely the heroes we need. Plenty more from Nga and Takara with us throughout the programme today as we take stock on the Business Week. Yeah, been a big week of tech earnings out on the New York Stock Exchange, hasn't it? Some of the biggest companies on the planet revealing their results and Takara, very much your beat tech as well as trash banders, massive, massive spending that these companies were announcing, particularly Google or their parent company, Alphabet, I guess the one really grabbing attention at the back end of this week.

**Takara Small** (1:46)
It's been interesting to watch, to be honest. Google, Alphabet had a standout quarter and yet you're still seeing investors who are cautious. You're seeing people pull back because as you mentioned, there are billions of dollars going into the AI space and we're not confident that we're going to see those returns.
Just here in Canada, we've announced a lot of money on data centers, on propping up businesses, and this all comes at a time where even the average person is saying, do we want this type of investment in AI? How does this help society? How does this improve our economies?

**Will Bain** (2:17)
And the numbers, incredible. So this idea of free cash flow, Takara, so that's the kind of money they've got left over after they've announced their investments, salaries and keeping the lights on and all that kind of stuff. Minus $6 billion potentially here for a company that's making hundreds of billions of dollars a quarter.

**Takara Small** (2:33)
Exactly, and I think that's why you're seeing capital spending plans, you're seeing a lot of concerns around partnerships and trades, and let's be honest, a lot of the dominant investment theme that we're seeing from investors and critics focused on how these companies are going to stay competitive, especially with some of the innovation we're seeing in Asia. How is this sustainable long-term?

**Nga Pham** (2:54)
Yes, definitely. I hear a lot of concerns actually about the markets, the volatility that it may actually bring in. Last year, I met some people from the UK in Taiwan, and I was so surprised that their knowledge and their understanding of the AI market is not as much as people in Taiwan. Obviously, people in Asia actually have been familiarised themselves with AI much, much earlier. But now, we think that maybe we should take a stop and look back and see how it goes.

**Will Bain** (3:26)
Takara investors seem to be suggesting maybe there was a need for a pause to Alphabet shares down 4% after the close yesterday as they're finding the first sign of a tiny bit of cold feet about just the scale of this spending and also the borrowing that's going with it too.

**Takara Small** (3:39)
I think we're starting to see that. We're seeing cold water thrown on this. Despite the fact we're seeing some companies have quite profitable returns, people are still fleeing and the fact that just recently we saw a little bit of a drawback from some of the stellar chip companies that have seen rallies of over 100%.
People are rethinking their investment. They're rethinking what is the profit and what does this mean for the average consumer?

**Will Bain** (4:04)
Well, we've seen a bit of that now, haven't we? I know you're in Hanoi at the moment, but you're between Hanoi and Taiwan as well. And TSMC, one of the biggest players in chips, has some interesting news, kind of to exactly what Takara was talking about this week.