Three things we learned about AI from Big Tech earnings

Leaders of tech companies Meta, Amazon and Google all reported quarterly financial results in in recent days

The world's biggest technology companies - including Microsoft, Meta, Google, Apple and Amazon - updated Wall Street this week on their finances.

One common thread emerged: they are all planning to continue spending massive amounts of money on artificial intelligence (AI).

The reaction from investors was that they need to see more tangible results to show for the $1tn (£743bn) and growing , external investment in things like computer chips, data centres, and even technical staff. It sent some tech stocks tumbling around the globe .

While each company operates in different sectors, their AI spending and plans showed they have a few other things in common as well.

OpenAI's release of ChatGPT in late 2022 kicked off the ongoing AI investment race, and every major tech company has since launched a consumer-facing AI chatbot of their own. Meta has Meta AI, Google has Gemini. Amazon has Rufus. Apple even relaunched Siri.

Yet, none of the chatbots or the related tools in and of themselves clearly provide a meaningful amount of revenue for the companies, despite being costly to create.

Instead, this batch of earnings results made clear that companies like Google, which is owned by Alphabet, and Meta are currently spending much more money related to AI tools than they bring in.

Both companies reported some of their lowest ever amounts of free cash flow, a measure of how much money a business has left over after paying for operations and investments.

Google spent so much money on AI that Alphabet's free cash flow was negative on revenue of $118bn, meaning it spent more than it brought in for the first time in the company's history as a public company.

Meta's free cash was just $784m on $61bn of revenue, meaning it spent almost as much money as it made during the quarter.

Meta's Reality Labs, which is responsible for its AI work, lost nearly $9bn in the first half of this year.

Look no further than Wall Street's reaction to Meta's quarterly results to see that investors are no longer placated with executive's claims that AI investment will turn out to be worth it at some unknown point in the future.