Q2 capex for Meta, Alphabet, Amazon, and Microsoft

Sherwood News

Big tech’s huge AI spending isn’t slowing down. The revenue? Uhhhhh...

Today is a good time to remind you that almost every major tech company is dropping large amounts of cash on AI tech that isn't making them anything back.

Rani Molla

8/5/24 10:11AM

Last quarter was a huge quarter for capital expenditure at big tech companies.

This one was somehow even bigger.

Amazon, Microsoft, Alphabet and Meta spent a combined $52.8 billion on capex in the second quarter — or nearly 60% more than the same quarter last year, according to standardized data from FactSet. The main expense? AI, as big tech hopes to invest big on the next big thing.

And according to their forward-looking statements, that spending is expected to go up even more.

Amazon CFO Brian Olsavsky

Looking ahead to the rest of 2024, we expect capital investments to be higher in the second half of the year. The majority of the spend will be to support the growing need for AWS infrastructure as we continue to see strong demand in both generative AI and our non-generative AI workloads.

Meta CFO Susan Li

We anticipate our full year 2024 capital expenditures will be in the range of $37 billion to $40 billion updated from our prior range of $35 billion to $40 billion. While we continue to refine our plans for next year, we currently expect significant CapEx growth in 2025 as we invest to support our AI research and our product development efforts.

Microsoft CFO Amy Hood

To meet the growing demand signal for our AI and cloud products, we will scale our infrastructure investments with FY 2025 capital expenditures expected to be higher than FY 2024.

Alphabet CFO Ruth Porat

Our reported CapEx in the second quarter was $13 billion. Once again, driven overwhelmingly by investment in our technical infrastructure with the largest component for servers followed by data centers. Looking ahead, we continue to expect quarterly CapEx throughout the year to be roughly at or above the Q1 CapEx of $12 billion.

What’s changed this quarter is that investors are more interested in when all this AI spending might actually yield returns.

When asked about AI capex ROI, Alphabet CEO Sundar Pichai said:

“The one way I think about it is when you go through a curve like this, the risk of underinvesting is dramatically greater than the risk of overinvesting for us.”

Microsoft CEO Satya Nadella said the company is pegging its AI spending to demand signals.

It's more important to manage, to capture the opportunity with the right product portfolio that's driving value.

Meta’s Porat:

We don't expect our GenAI products to be a meaningful driver of revenue in 2024. But we do expect that they're going to open up new revenue opportunities over time that will enable us to generate a solid return off of our investment

In other words: They’re spending now in hopes of bigger returns down the line.

Jon Keegan9h

Sora’s ghoulish reanimation of dead celebrities raises alarms

OpenAI’s video generation app Sora has spent its first two weeks at the top of the charts.

The startup’s fast-and-loose approach to enforcing intellectual property rights has seen the app flooded with videos of trademarked characters in all sorts of ugly scenarios.

But another area where Sora users have been pushing the limits involves videos that reanimate dead celebrities.

And we’re not talking just JFK, MLK, and Einstein. Videos featuring more recently deceased figures such as Robin Williams (11 years ago), painter Bob Ross (30 years ago), Stephen Hawking (seven years ago), and even Queen Elizabeth II (three years ago) have been generated. Some of the videos are racist and offensive, shocking the relatives of the figures.

OpenAI told The Washington Post that it is now allowing representatives of “recently deceased” celebrities and public figures to request that their likenesses be blocked from the service, though the company did not give a precise time frame for what it considered recent.

AI videos of dead celebrities are horrifying many of their families

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But another area where Sora users have been pushing the limits involves videos that reanimate dead celebrities.

Rani Molla10h

Tesla is selling unsold Cybertrucks to Elon Musk’s other companies

Sales of Tesla’s Cybertruck, once expected to reach hundreds of thousands per year, are currently in the low tens of thousands range and falling. Last quarter in the US, Tesla sold fewer than 5,400 of the “apocalypse-proof” vehicles, for a total of about 16,000 this year, Business Insider reports, citing Cox Automotive data.

That’s a 63% drop from the same quarter a year ago, even as Tesla as a whole notched its best quarterly sales ever, spurred by the expiration of the $7,500 federal EV tax credit.

With sales lagging, the company has dialed back production of the stainless steel behemoths, but there’s still been an excess.

Fortunately for Tesla, Electrek reports that CEO Elon Musk has other uses for Cybertrucks within his other companies, which often share resources and personnel. Tesla is delivering truckloads of the EV to both xAI (which Tesla shareholders will vote next month on whether to invest in) and SpaceX, where Cybertrucks are replacing internal combustion engine support fleets.

There’s a lot of chatter about “circular deals” in the billion-dollar pacts announced in the AI space on a weekly basis. But it doesn’t get much more circular than this, with production and buying activity kept within the Musk corporate family.

Elon Musk's SpaceX and xAI are buying Tesla's unsold Cybertrucks

That’s a 63% drop from the same quarter a year ago, even as Tesla as a whole notched its best quarterly sales ever, spurred by the expiration of the $7,500 federal EV tax credit.

With sales lagging, the company has dialed back production of the stainless steel behemoths, but there’s still been an excess.

Rani Molla12h

Tesla has begun selling the Model Y Standard in parts of Europe, where it has lots of cheaper competition

Days after rolling out “Standard” trim levels of its Model Y and Model 3 in the US, Tesla has started selling the Model Y Standard in some European countries. Standard Model Ys begin at about 40,000 euros, depending on the country, roughly 10,000 euros cheaper than the current Premium versions. In the US, Standard versions are about $5,000 cheaper than their souped-up peers. The model isn’t yet on sale in the UK or Ireland, where cars are driven on the left-hand side of the road.

While the Standard Teslas are cheaper, they pale in comparison to the many affordable EV options available in Europe, including those from China’s BYD, some of which start below 25,000 euros. CEO Elon Musk has called Europe the company’s “weakest market,” blaming the lack of approval for Tesla’s full self-driving technology for the shortfall.

Model 3 Standards don’t appear to be available yet in Europe.

Jon Keegan10/10/25

OpenAI commits up to $25 billion for 500-megawatt “Stargate Argentina” data center

OpenAI has reportedly signed a letter of intent to invest up to $25 billion on “Stargate Argentina,” a new 500-megawatt AI data center.

Reuters reports that the deal would involve tax incentives.

In a video announcing the project, OpenAI CEO Sam Altman said:

“Our vision for Stargate Argentina is to deliver a major boost to the country’s AI infrastructure, creating a foundation for new capabilities from smarter public services to tools that help small businesses compete globally.”

OpenAI did not immediately respond to a request for comment.

You may remember the name “Stargate” from the megaproject that tech giants and the Trump administration announced earlier this year to build a huge number of data centers in the US. And you may remember Argentina as the nation the Trump administration is now bailing out with a $20 billion currency swap.

Millie Giles

BORN TO SCROLL

10/10/25

Nearly 40% of kids under 2 years old interact with smartphones, according to their parents

A new Pew Research study outlines just how pervasive technology use among US children has become.