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Zero stroke is an apocryphal condition supposedly seen during times of extreme hyperinflation. Victims, faced with unmanageably large prices, lose their grip on ciphers and find themselves compelled to write strings of zeros at the end of every number. First reported in 1920s Germany, the condition has surfaced anew, in Silicon Valley.
Companies such as Apple, Alphabet and Meta Platforms are tossing around 11 and 12-digit sums such that the amounts are losing their power to impress. The maker of iPhones this week said it would invest $500bn in the US over the next four years. Microsoft-backed OpenAI has pledged the same amount for its “Stargate” data centre project — also over four years.
They are partly just keeping up with the Joneses. Elsewhere in the tech sector Amazon, Meta Platforms, Alphabet and Microsoft are collectively deploying $320bn on capital expenditure in their current fiscal year — about 40 per cent more than the previous 12 months, largely on artificial intelligence initiatives. A decade ago they shelled out just $23bn.
Still, what’s a few hundred billion in a world that increasingly measures in trillions? Five years ago there were two companies with market capitalisations over $1tn. Today there are 10. Elon Musk casually suggests his carmaker Tesla could hit $10tn. Fund manager James Anderson, an early Tesla backer, thinks chipmaker Nvidia could be worth $50tn in a decade, implying over 30 per cent annual share price growth until then.
In many cases, big numbers are more size than substance. The so-called hyperscalers — Alphabet, Meta and so on — are building data centres but offer scant detail on their expected financial returns. Apple’s pledge underwhelms in a different way: the $500bn is not new investment, but an estimate of everything it will spend in the US in the next four years, from wages to taxes.
Needless to say, this is partly an appeal to an America-first president by a multinational manufacturing company at grave risk from tariffs. During the last Trump administration, Apple boss Tim Cook committed to contribute $350bn to the US economy. Bank of America analysts estimate only half was “direct spend”, meaning research, development and capital expenditure.
Investors should prefer it that way. Apple’s half-trillion is ill-defined but looks to involve more of things it already does — manufacturing, research, training and hiring, albeit with an AI flavour. Apple also has a record of keeping an eye on shareholders. It spends about $100bn a year on buybacks and dividends, almost three times as much as Meta or Microsoft.
As for the hyperscalers, they are going all in on an AI market that’s still in its infancy. Their case of financial “zero stroke” is therefore more troubling. Alphabet, Amazon and Microsoft shares are down roughly 10 per cent over the past month; Apple’s are up by that much. Cook’s big number is the kind investors can afford to ignore, happily.
john.foley@ft.com
