AI is meant to slash tech costs. So why are they rising?
ASX Limited’s shares dropped 13% after announcing its technology upgrade costs would surge 18-21% in 2027, totaling nearly $400 million over 2027-2028. The company cited chronic underinvestment in systems, as previously flagged by ASIC, as the reason for the unexpected expenses.
ASX Limited’s shares fell as much as 13% on Tuesday following a report that its technology transformation costs would rise significantly. The company revealed its expenses for the 2027 financial year would increase by 18% to 21%, far exceeding earlier projections, due to long-term underinvestment in its systems. The estimated capital expenditure for 2027 and 2028 now stands at nearly $400 million, a sharp rise attributed to necessary upgrades. This aligns with findings from the Australian Securities and Investments Commission (ASIC), which previously identified ASX’s chronic underfunding of technology infrastructure. The unexpected cost surge reflects the challenges of modernizing outdated systems, despite AI’s intended role in reducing operational expenses. Investors reacted negatively to the revised financial outlook, which now includes higher-than-expected spending to align with industry standards. ASX’s situation highlights broader industry trends where legacy systems require massive reinvestment, even as AI is marketed as a cost-saving solution. The company’s revised budget underscores the gap between theoretical efficiency gains and real-world implementation costs.
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