Big Tech’s AI spending bonanza isn’t slowing down anytime soon.
On quarterly earnings calls with investors this week, Amazon, Microsoft, Google, and Meta all raised capex guidance for the year as the AI race intensifies.
The level of investment represents a dramatic spike in spending in a short period of time. Amazon spent $48.4 billion on capital investments in 2023. The cloud giant is tracking to spend over $100 billion this year.
Google stunned investors with a $10 billion increase — out of character for what Wall Street considers the most measured of the cloud giants.
Amazon signaled that it plans to fly right past its initial capex target of $100 billion for the year. Meta raised its forecast slightly. Microsoft, which briefly hit $4 trillion in market value this week after a blowout earnings call, also said it was continuing full-steam ahead on capital investments for the year.
Even Apple, a typically austere and restrained spender when compared to its Big Tech peers, has jumped aboard the “AI crazy train,” as Bernstein analyst Mark Shmulik dubbed Big Tech’s race to build more data centers.
Apple spent $9.5 billion in capital expenditures in the first three quarters of its fiscal year, up nearly 50% from the same period last year. CEO Tim Cook attributed the jump to AI investments, including data centers.
Amazon spent $31.4 billion on capex in its second quarter, up from $24.3 billion in the first. On the company’s earnings call, CFO Brian Olsavsky told investors that quarterly capital investments for the rest of the year are expected to mirror second-quarter spending.
Bernstein’s Shmulik adjusted his guidance to $117 billion in capex for the year.
The company’s stock was down 7% after hours, with investors disappointed by the company’s profit guidance and sluggish growth compared to its rivals.
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For now, Amazon has “more demand than we have supply,” said CEO Andy Jassy, with power being the biggest constraint.
Microsoft expects to spend $30 billion in capex in its current quarter, driven by “strong demand signals,” CFO Amy Hood said on the company’s earnings call earlier this week. It spent $24.2 billion in the first quarter.
The revised guidance represents a turnaround from the company’s comments earlier this year, when it said it was expecting capex to start growing at a slower pace.
On the call, Microsoft disclosed Azure revenue — it grew 34% to $75 million — for the first time ever.
Google surprised investors by raising its capex forecast by $10 billion for the year to $85 billion. The massive expenditures are unusual for Alphabet-owned Google, Bernstein’s Shmulik said.
The company is hoping to keep its edge in the AI race after a strong quarter for cloud sales, which surged 32% in the most recent quarter.
Meta adjusted the bottom of its capex range to $66 million, up from $64 million, and kept the top of the range at $72 million.
CEO Mark Zuckerberg said on the company’s earnings call this week that ad sales were up 20% in the most recent quarter thanks to AI.
The company has been on an aggressive — and expensive — AI hiring spree, including a $15 billion investment in Scale AI.
