{"id":37861,"date":"2025-09-14T23:56:00","date_gmt":"2025-09-14T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=37861"},"modified":"2025-11-21T11:18:07","modified_gmt":"2025-11-21T03:18:07","slug":"concerns-ai-frenzy","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/","title":{"rendered":"Hidden Concerns Beneath the AI Frenzy"},"content":{"rendered":"\n<p>AI frenzy has been there for more than 3  years, however, there are lots of hidden concerns beneath the AI frenzy.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/#Shocking_Data\" >Shocking Data<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/#A_Disturbing_Side\" >A Disturbing Side<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/#Asset-Light_Companies_Become_Cash_Generators\" >Asset-Light Companies Become Cash Generators<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/#The_trend_is_changing\" >The trend is changing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Shocking_Data\"><\/span>Shocking Data<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Data shows that since the first quarter of 2023, investment in information processing equipment in the United States has grown by 23% after adjusting for inflation, while total US gross domestic product (GDP) has only grown by 6% over the same period. In the first half of 2025, information processing investment accounted for more than half of the 1.2% overall US GDP growth.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Disturbing_Side\"><\/span>A Disturbing Side<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A closer look reveals a disturbing side to the AI boom: all the spending on chips, data centers, and other AI infrastructure is draining the cash reserves of American companies. This may highlight the hidden risks of the AI boom\u2014while no one doubts AI&#8217;s potential to boost growth and productivity in the long term, the massive financing supporting this boom could put pressure on companies and the capital markets.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Asset-Light_Companies_Become_Cash_Generators\"><\/span>Asset-Light Companies Become Cash Generators<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Wall Street favors asset-light companies. For years, a major reason investors have favored these companies has been their &#8220;asset-light&#8221; nature\u2014tech giants generate profits through intangible assets such as intellectual property, software, and digital platforms with &#8220;network effects.&#8221; From 2016 to 2023, US tech giants clearly achieved the dual goals of being both asset-light and cash-generating machines\u2014Alphabet, Amazon, Meta, and Microsoft saw their free cash flow and net income grow roughly in tandem during this period.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_trend_is_changing\"><\/span>The trend is changing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This trend is best reflected in the metric &#8220;free cash flow&#8221;\u2014roughly defined as cash flow from operating activities less capital expenditures, excluding items such as non-cash impairment charges that can distort net income. It is perhaps the purest measure of a company&#8217;s intrinsic cash generation capacity.<\/p>\n\n\n\n<p>However, <a href=\"https:\/\/www.hamiltonlane.com\/en-us\/insight\/weekly-research-briefing\/weekly-research-briefing-so-many-pickles\" target=\"_blank\" rel=\"noopener\">since 2023, the two have begun to diverge significantly. According to FactSet data, during this period, the combined net income of these four companies increased by 73% compared to two years prior, to $91 billion, while free cash flow decreased by 30% to $40 billion. <\/a>Despite Apple&#8217;s relatively conservative capital expenditures, its free cash flow has also begun to lag behind its net income growth.<\/p>\n\n\n\n<p>For example, Meta&#8217;s second-quarter 2025 earnings report showed a 36% increase, but its free cash flow decreased by 22%. Amazon began to reduce the scale of its fulfillment center (automated logistics facilities) construction in 2022, allowing its free cash flow to turn positive.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"132\" height=\"90\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2025\/11\/AI_Frenzy-Custom.jpg\" alt=\"AI Frenzy\" class=\"wp-image-37864\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/26\/ai-jeopardizes-cash\/\">AI jeopardizes cash flow and profits<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/11\/20\/oracle-growth-driver\/\">Oracle growth drivers in the future and the biggest investment risk: TikTok US, Data center, AI database<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/12\/ai-job-openings-tripled\/\">AI job openings tripled in past five years<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/09\/14\/concerns-ai-frenzy\/\">Hidden Concerns Beneath the AI Frenzy<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/10\/04\/ai-software-make-money\/\">Some AI software vendors are starting to make money<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/20\/generative-ai-cost\/\" target=\"_blank\" rel=\"noreferrer noopener\">How Much Does Generative AI Cost?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/28\/reddit-making-money\/\">Reddit first profitability sent stock rally 2.5 folds<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/18\/adobe-buy-figma\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why Adobe&#8217;s Figma Acquisition Caused Upheaval<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/03\/04\/value-and-problem-palantir\/\">The value of Palantir, pros and cons of Palantir investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/14\/palantir-introduction\/\">What kind of company is Palantir?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/04\/03\/openai-and-chatgpt\/\">OpenAI, the Generative Artificial Intelligence rising star and ChatGPT<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/08\/deepseek-rout\/\">DeepSeek routed the global AI and stock<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/09\/20\/oracles-oci-ai\/\">Oracle\u2019s cloud computing and AI finally recognized<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/03\/27\/oracle-db-dominator\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does database monopoly Oracle make money? 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I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>AI frenzy has been there for more than 3 years, however, there are lots of hidden concerns beneath the AI frenzy.<\/p>\n","protected":false},"author":1,"featured_media":37864,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[104,1470,1532],"tags":[],"class_list":["post-37861","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-artificial-intelligence","category-company-management","category-crisis-and-risk"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/37861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=37861"}],"version-history":[{"count":13,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/37861\/revisions"}],"predecessor-version":[{"id":40104,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/37861\/revisions\/40104"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/37864"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=37861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=37861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=37861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}