The obvious reason is that they think it will pay off in the future. Google didn't start profitable, it is now one of the most profitable companies in the world.

Those who invest in money-losing AI believe that it will be the next Google and that profits will come.

Or alternatively, they hope to sell to the greater fool.

Irrational exuberance

> As in, why are they choosing to lose all that money?

Executive egos and market hype

The market hype is real. Check-signers at businesses expect LLMs to have the ability the AI CEOs talk about in their interviews and conferences but don’t exist (and are no where near existing).