The AI Capex Paradox, Explained Using Monsters From the Odyssey -- WSJ

By Ed Ballard

As lifelong classicists and Christopher Nolan fans know, one of the ordeals that Odysseus and his crew endured on their way home from Troy came when they had to sail their boat between two hazards: the sea-monster Scylla and the whirlpool Charybdis.

It's really a lot like earnings season. As they prepare to parse the latest results from Microsoft and Meta Platforms, investors also need to keep two perils in mind.

What if these companies spend too much? Alphabet's earnings last week crystallized this side of the equation. The company raised its capital-expenditure guidance to $200 billion. The shares dipped, reflecting investors' worry that artificial intelligence won't generate enough returns to justify that epic spending.

What would happen if they slow down? If excessive exuberance worries holders of the tech giants' stock, an unexpected swing to caution could raise equally troubling questions about the direction of U.S. GDP numbers. At this point, AI spending underpins the economy, and how much a slowdown would hurt remains an open question.

Following the advice of the goddess Circe, Odysseus prioritized keeping clear of Charybdis, even though that allowed Scylla to snatch his six best men. I'm not sure who those guys represent in this analogy, but investors will hope for a less bloody compromise when Microsoft and Meta post their results after the bell.

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July 29, 2026 09:00 ET (13:00 GMT)