The real competition in AI has shifted away from which company has the smartest model and toward who can finance and run the infrastructure behind it most cheaply, according to IMD Business School professor Amit Joshi writing in Fortune. As large language models increasingly perform at similar levels, Joshi argues they are becoming a commodity, leaving financial firepower rather than technical superiority as the deciding factor in who wins.
The scale of spending backs up his point. Amazon, Microsoft, Alphabet, and Meta have poured $1.1 trillion into AI infrastructure since 2023, with another $745 billion planned this year alone. Nvidia is separately mobilizing $500 billion in capital for infrastructure partnerships, and Google structured a $200 billion financing deal with a group of financial institutions specifically to fund Anthropic's infrastructure buildout.
Cloud businesses are already capturing the payoff. Microsoft's cloud unit grew 32 percent to $39.3 billion, Amazon Web Services grew 37 percent to $42.2 billion, and Google Cloud surged 82 percent to $24.8 billion. Not every company is riding the wave, though: IBM saw its stock collapse 25 percent in a single day after customers postponed software purchases in order to redirect spending toward AI infrastructure instead.
Joshi cites Microsoft CEO Satya Nadella's observation that every model is substitutable, and Amazon CEO Andy Jassy's prediction that at least half a dozen comparably good AI models will soon exist. Taken together, both executives are describing a market where the underlying technology stops being the differentiator.
The upshot, in Joshi's view, is that investors and executives should stop rewarding companies simply for having access to a strong model and start paying closer attention to balance sheets and the cost of capital. Success in this next phase, he argues, belongs to companies that can build and run infrastructure efficiently, which favors hyperscalers with deep financial resources and puts pressure on traditional enterprise software companies competing for the same corporate budgets.