At the top end of their latest guidance, Microsoft, Google, Amazon, and Meta are on track to spend a combined $745 billion on capital expenditures this year. The money is going into chips, servers, data centers, and networking — and it signals that the AI fight has moved from model bragging rights to raw compute scale and, ultimately, commercial returns.
The first place revenue is showing up? The cloud. Azure grew 43%, AWS 37%, and Google Cloud 82%. Amazon says its generative AI services and custom chip business have each crossed $25 billion in annualized revenue.
Microsoft is also selling AI as enterprise software. Paid seats for Microsoft 365 Copilot now top 30 million, with net new seats doubling quarter over quarter. Meta's ad revenue grew 27%, but the company spent $31.1 billion on capex in the quarter and finished with just $784 million in free cash flow. For now, Meta's AI spending is still being paid back primarily by its advertising business.
The market isn't opposed to tech giants pouring more money into AI. But it is starting to look more closely at the cash coming back out. Microsoft and Amazon saw their stocks rise after earnings. Alphabet's cloud business grew sharply, but its capex and cash flow raised concerns. Meta got the worst of it, facing lower profits, shrinking cash flow, and rising AI spending all at once — and its stock fell the most after the report.