Capital expenditures at Amazon, Alphabet, Microsoft and Meta grew to more than $44B last quarter.

Tech companies had a record-breaking $44B spending spree thanks to AI

And they plan on spending even more

5/1/24 2:22PM

Big tech is spending big on AI. Last quarter the combined capital expenditure for Amazon, Alphabet, Microsoft, and Meta was a record more than $44 billion, according to standardized data from FactSet.

And listening to the companies’ forward-looking statements on their latest earnings calls, that spending is heading even higher:

Amazon CEO Andy Jassy: “We expect the combination of AWS's reaccelerating growth and high demand for gen AI to meaningfully increase year over year capital expenditures in 2024, which given the way the AWS business model works, is a positive sign of the future growth. The more demand AWS has, the more we have to procure new data centers power and hardware.”

Alphabet CEO Sundar Pichai: “We are committed to making the investments required to keep us at the leading edge in technical infrastructure. You can see that from the increases in our capital expenditures. This will fuel growth in Cloud, help us push the frontiers of AI models, and enable innovation across our services, especially in Search.”

“Microsoft CFO Amy Hood: “We expect capital expenditures to increase materially on a sequential basis driven by cloud and AI infrastructure investments.”

Meta CEO Mark Zuckerberg: “As we're scaling capex and energy expenses for AI, we'll continue focusing on operating the rest of our company efficiently. But realistically, even with shifting many of our existing resources to focus on AI, we'll still grow our investment envelope meaningfully before we make much revenue from some of these new products.”

Generally, the market seems to approve, but that’s also because these companies are raking in gobs of money, even if they’re spending more than usual. The one exception seems to be for Meta, where it’s not quite clear how much of the growing spending will go toward AI (investors like!) or the Metaverse (investors hate!), and how long it will take for these bets to drive revenue.

Jon Keegan7h

OpenAI’s hot Sora video app is a copyright lawsuit waiting to happen

OpenAI has generated some serious buzz surrounding its new Sora video generation app. The app is currently No. 3 on the iOS free app leaderboards, even though it’s invitation-only for the time being.

But users have been flooding social media with videos generated by Sora, and in addition to a “Skibidi Toilet” Sam Altman and the OpenAI CEO dressed as a Nazi, the app is able to create videos featuring iconic characters from Disney, Nintendo, and Paramount Skydance.

On the system card for the Sora 2 AI model (which powers the Sora app), OpenAI says it was trained on things found on the internet:

“Sora 2 was trained on diverse datasets, including information that is publicly available on the internet, information that we partner with third parties to access, and information that our users or human trainers and researchers provide or generate.”

This seems like an invitation for a big copyright lawsuit, along the lines of the one Disney, Dreamworks, and NBCUniversal recently filed against AI image generator Midjourney.

But OpenAI is trying to flip the responsibility of protecting copyrighted material to the intellectual property owners themselves. According to The Wall Street Journal, OpenAI is allowing copyrighted material in Sora by default, unless copyright holders opt out of the service.

The courts will have to decide if this novel approach to intellectual copyright law works, but government regulators may not be that big of a problem, as Altman has made sure OpenAI is in the good graces of the Trump administration. If OpenAI has to pay up to copyright holders after a lawsuit, what’s a few billion dollars here or there when you’re raising so much capital?

OpenAI’s AI video app stirs copyright questions, pumping out videos of Mario and Pikachu

On the system card for the Sora 2 AI model (which powers the Sora app), OpenAI says it was trained on things found on the internet:

“Sora 2 was trained on diverse datasets, including information that is publicly available on the internet, information that we partner with third parties to access, and information that our users or human trainers and researchers provide or generate.”

This seems like an invitation for a big copyright lawsuit, along the lines of the one Disney, Dreamworks, and NBCUniversal recently filed against AI image generator Midjourney.

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Tension emerges between Meta’s AI teams

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