The Week in Breakingviews: Taking stock of tech

Lazard

03/05/2026 12:27

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Peter Thal Larsen

LONDON, May 3 (Reuters Breakingviews) - Welcome back! As we head into a third month with oil around or above $100 a barrel, it’s time to brace for real economic pain, but also to expect a post-war oil glut. Send me your own projections. If this newsletter was forwarded to you, sign up here to get it in your inbox every weekend.

OPENING LINE

“Meta Platforms has exposed a recurring dilemma for China: the country wants its technology champions to go global, but not to leave ​home.”

Read more: Meta pokes holes in China’s great AI firewall.

FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK

Goldman Sachs generated $3.7 billion last year from financing activities on which it claims to have never lost a cent. (Reward, meet risk)

        Green jet fuel still costs twice as much as the normal stuff. (Despite the energy crisis)

Quantum computing startups’ revenue mostly comes from the public sector. (If it exists at all)

The UAE’s budget breaks even with oil at $45 a barrel. (Half what Saudi Arabia needs)

        Lazard bought an advisory boutique run by Hungary’s former prime minister. (Not that one)

BOOMTOWN STATS

Is Big Tech’s big bet paying off? Just a few months ago it was hard to imagine how the world’s largest companies would ever recoup vast investments in data centres and chips. Yet since the start of the year spending on artificial intelligence has surged, particularly at companies. Google owner Alphabet’s GOOGL.O AI models processed 16 billion tokens per minute in the first quarter, up from 10 billion in the previous three months. One technology director who was spending a few hundred dollars a week on large language models a year ago recently told me his weekly outlay is now tens of thousands of dollars. Finance executives grumble about managing budgets when technology providers insist on charging by the token, rather than the software industry norm of predictable monthly bills. Indian IT companies talk of “AI deflation”.

This activity is swelling the top lines of the world’s biggest companies. Microsoft’s MSFT.O AI business is generating revenue at an annual rate of $37 billion, more than double the level a year ago. Google’s cloud unit brought in sales of $20 billion in the first quarter, up 63% on the same period of 2025. That figure would have been higher but for constraints on processors, says Alphabet CEO Sundar Pichai. This makes the scramble for data centres, chips, and power seem logical – even prescient.

Yet it’s still far from clear that the boom is durable. For starters, tech giants are cranking up capital spending even further. Alphabet, Amazon AMZN.O, Meta Platforms META.O and Microsoft – which released quarterly results within a few minutes of each other on Wednesday – now expect to collectively invest up to $725 billion this year. These figures are not entirely rising by choice. Soaring prices of memory chips and other components will add $25 billion to Microsoft’s capital spending this year, for example. In other words, the software giant and its rivals are getting less bang for their AI buck.

Whether users of AI models are getting value for money is also an open question. Most companies are energetically experimenting with the technology. But soaring bills will force them to reserve the most advanced and expensive models for truly valuable tasks. More mundane jobs will be sent to cheaper models, or rationed. Executives also fret that rivals will quickly mimic AI-related productivity gains, leaving them with higher costs but no lasting competitive advantage. In other words, the scale of returns accruing to users of AI – and their customers – is still anybody’s guess.

Stock market investors have largely shrugged off the surge in activity. Though Alphabet shares are up more than 20% this year, they trade at 20 times expected earnings for 2028 – slightly lower than in early January. Meta Platforms’ shares are down 15%, but its earnings multiple of 17 times is broadly unchanged. Multi-trillion-dollar market capitalisations depend on Big Tech firms sustaining their dominance far into the future. Whether shareholders are being far-sighted or getting carried away is still a live debate.

CHART OF THE WEEK

One industry that has resisted the AI jobs apocalypse is asset management. Employment at the biggest multi-strategy hedge funds has risen steadily in recent years. Of course, fund managers have long grappled with another form of automation as money has rushed into low-cost passive funds. But Felix Martin remains confident the human factor is here to stay.

THE WEEK IN PODCASTS

What’s it like to run a large provider of financial infrastructure in an era of fragmentation? That was my opening question for Stephan Leithner, CEO of Deutsche Boerse DB1Gn.DE, when he visited The Big View studio recently. We also talked about how Europe can become more financially self-sufficient, and the effects of new technologies on trading and processing securities.

As Europe braces for shortages of oil, gas, and related products like jet fuel, Yawen Chen and Oliver Taslic jumped into the Viewsroom with Aimee Donnellan and Jonathan Guilford to debate what lies in store.

PARTING SHOT

Car companies used to showcase their shiniest new models in Frankfurt, Detroit and Tokyo. These days, the best place to glimpse the future of four-wheeled transport is in Beijing. Katrina Hamlin spent the week in the Chinese capital inspecting in-car AI agents, testing sound systems with smart karaoke functions, and timing batteries that charge in under seven minutes. Coming soon to a road near you – provided it’s open to Chinese models.

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Pod shops' appetite for human talent has not slacked https://www.reuters.com/graphics/BRV-BRV/klpyllbrmvg/chart.png

(Editing by George Hay; Production by Oliver Taslic)

((For previous columns by the author, Reuters customers can click on LARSEN/peter.thal.larsen@thomsonreuters.com))