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 11:11AM

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.

Chris Stokel-Walker

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Prediction markets have, predictably, been given a boost by the summer of sports

Major platforms like Kalshi and Polymarket have seen huge upticks in users of late, thanks in no small part to what’s felt like a recent sporting smorgasbord, with major competitions across hockey, basketball, and soccer soaking up fans’ time (and spending, clearly) at the outset of summer.

While gaming industry groups may not like it, there’s been a huge change in the methods people are using to put money on the big games, with everyone from fortunate NYC bar owners, to a far less fortunate Spanish supporter, turning to prediction markets to try and turn their sports know-how into cold, hard cash.

According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

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According to a new report from Adam Blacker for apptopia, that shift might have been even more seismic than imagined in the wake of the NBA and NHL finals and around the 2026 World Cup kicking off.

South by Southwest Conference and Festivals

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Low-volume production started in April. Now people are noticing them more and more in the wild.

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Anthropic pulls Fable and Mythos access worldwide after Trump administration bars their use by foreign nationals

Only days after releasing two versions of its next-gen AI model, Anthropic has disabled them for users worldwide.

Anthropic says it received a Friday night order from the Trump administration to suspend access to the models for any foreign national (anywhere in the world) — a group that included some Anthropic employees. In response, the company turned off access to everyone.

Last week, the company released to the public its much-anticipated Claude Fable 5 model (and its restricted version Claude Mythos 5, which is still being tested with trusted partners). Anthropic said in a blog post announcing the action that officials cited national security concerns with the new models, while offering few specific details.

The post said that the government gave the company “verbal evidence of a potential narrow, non-universal jailbreak” of the public Fable 5 model. A jailbreak is a means by which users can evade restrictions built into the code to unlock prohibited functionality. Anthropic downplayed the significance of the attack, and said other major models, such as OpenAI’s GPT-5.5, could also be affected by the technique described.

Fears of these first Mythos-class models being misused are running high, after Anthropic warned the cybersecurity world in May that the advanced cyber capabilities of Mythos have rapidly discovered thousands of vulnerabilities in ubiquitous software, leading to the decision to restrict the full version of the model to a close group of trusted partners for testing.

This morning, Axios reported that Anthropic technical staff have flown to Washington to meet with White House officials to resolve the issue.

The Wall Street Journal is reporting that the Trump administration’s decision to take action against Anthropic was prompted by discussions that Amazon CEO Andy Jassy had with officials, including Treasury Secretary Scott Bessent. According to the report, Amazon researchers said they had been able to evade some of Fable 5’s security restrictions using specific prompts. Amazon is a major investor in Anthropic.

Anthropic is currently suing the US government to fight the Pentagon’s blacklisting of the company on national security grounds.

Statement on the US government directive to suspend access to Fable 5 and Mythos 5