Silicon Valley’s artificial intelligence frenzy has found a new gear.
Two and a half years after OpenAI set off the artificial intelligence race with the release of the chatbot ChatGPT, tech companies are accelerating their A.I. spending, pumping hundreds of billions of dollars into their frantic effort to create systems that can mimic or even exceed the abilities of the human brain.
The tech industry’s giants are building data centers that can cost more than $100 billion and will consume more electricity than a million American homes. Salaries for A.I. experts are jumping as Meta offers signing bonuses to A.I. researchers that top $100 million.
And venture capitalists are dialing up their spending. U.S. investment in A.I. companies rose to $65 billion in the first quarter, up 33 percent from the previous quarter and up 550 percent from the quarter before ChatGPT came out in 2022, according to data from PitchBook, which tracks the industry.
“Everyone is deeply afraid of being left behind,” said Chris V. Nicholson, an investor with the venture capital firm Page One Ventures who focuses on A.I. technologies.
This astonishing spending, critics argue, comes with a huge risk. A.I. is arguably more expensive than anything the tech industry has tried to build, and there is no guarantee it will live up to its potential. But the bigger risk, many executives believe, is not spending enough to keep pace with rivals.
“The thinking from the big C.E.O.s is that they can’t afford to be wrong by doing too little, but they can afford to be wrong by doing too much,” said Jordan Jacobs, a partner with the venture capital firm Radical Ventures.
The biggest spending is for the data centers. Meta, Microsoft, Amazon and Google have told investors that they expect to spend a combined $320 billion on infrastructure costs this year. Much of that will go toward building new data centers — more than twice what they spent two years ago.
As OpenAI and its partners build a roughly $60 billion data center complex for A.I. in Texas and another in the Middle East, Meta is erecting a facility in Louisiana that will be twice as large. Amazon is going even bigger with a new campus in Indiana. Amazon’s partner, the A.I. start-up Anthropic, says it could eventually use all 30 of the data centers on this 1,200-acre campus to train a single A.I system.
Some experts question whether companies like Anthropic will continue to improve their A.I. systems at the rapid rate they have maintained over the last few years. But Amazon says that even if the progress stops, it will use those 30 data centers to deliver A.I. systems to customers.
These companies are spending so much on data centers, they see no problem with dropping several billions more to buy a start-up or millions on a world-class A.I. researcher. In 2013, Google shocked Silicon Valley when it paid $44 million for just three researchers. Today, that seems like table stakes.
Meta just invested $14.3 billion in Scale AI, a start-up that helps collect and organize the enormous amounts of digital data needed to train A.I. systems. In return, Meta landed Scale AI’s young chief executive, Alexandr Wang, who is considered an up-and-coming deal maker in the A.I. world.
Meta was not the first big technology company to make such an unusual deal. Google, Microsoft and Amazon have also been investing hundreds of millions — or even billions — in start-ups just for the right to hire their employees and use their technology. In essence, they bought everything but the start-ups.
“Companies are acquiring other companies not necessarily for their products or their services or their revenues but just for their talent,” said Dimitri Zabelin, an emerging-technology analyst at PitchBook.
The Scale AI investment was part of an effort by Mark Zuckerberg, Meta’s chief executive, to start an A.I. research lab dedicated to the creation of superintelligence, a hypothetical technology that would be more powerful than the brain.
Mr. Zuckerberg has been offering compensation packages worth as much as $100 million a person. He and his company made more than 45 offers to researchers at OpenAI alone, according to a person familiar with these approaches.
(The New York Times has sued OpenAI and its partner, Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit’s claims.)
One Silicon Valley giant, Apple, has been more cautious about chatbots. But as the A.I. race escalates, Apple is also scrambling for talent. The company has had internal discussions about buying the A.I. start-up Perplexity, according to a person familiar with those conversations. Perplexity is valued at $14 billion.
“Apple seems to be sitting on its hands. But I am sure they will surprise us before too long,” said Matt Murphy, a partner at the venture firm Menlo Ventures.
An Apple spokesman did not respond to a request for comment.
But as venture firms double down on their deal making, there is less appetite for investing in general A.I. systems designed to do everything, because that work is dominated by established companies like OpenAI and Google. Instead, they are starting to focus on A.I. that does specific tasks, like Ribbon, a company that does A.I. for job interviews, and Eleos Health, which creates A.I. to record and summarize doctor visits.
Tech companies acknowledge that they may be overestimating A.I.’s potential. But even if the technology falls short, many executives and investors believe, the investments they’re making now will be worth it.
“Christopher Columbus thought he was headed to the Orient, and he ended up in the Caribbean,” said Mr. Nicholson of Page One Ventures. “He did not get to where he thought he was going, but he still got to a place that was highly valuable.”
Tripp Mickle contributed reporting.
Cade Metz is a Times reporter who writes about artificial intelligence, driverless cars, robotics, virtual reality and other emerging areas of technology.
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