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.

Jon Keegan5h

Anthropic launches “Claude Design,” sending shares of Figma and Adobe down

Anthropic has been slowly and steadily gaining a leading share in the enterprise AI market by focusing on coding, spreadsheets, and other common productivity and workplace apps.

Now it’s going after design apps.

Today Anthropic launched Claude Design, a dedicated app powered by its latest model, Claude Opus 4.7, that lets users use text prompts to build website designs, user interface prototypes, presentations, and marketing materials.

Shares of Figma and Adobe sank on the news.

While Claude has previously had the ability to create designs and user interfaces, breaking it out into a dedicated app signals a major new piece of its enterprise strategy alongside its popular Claude Code product.

Introducing Claude Design by Anthropic Labs

Shares of Figma and Adobe sank on the news.

Rani Molla10h

Apple’s China iPhone shipments surged 20% in Q1 even as overall smartphone shipments fell

Apple’s iPhone shipments in China jumped 20% last quarter, even as the country’s overall smartphone market fell 4%, according to new data from Counterpoint Research. Rising memory costs have pushed prices higher across the industry, weighing on demand.

Apple appears poised to ride out the broader smartphone slump. Its strength at the less price-sensitive high end of the market and its unusual leverage over suppliers, which helps keep costs in check, give it an edge over rivals.

Greater China remains a critical region for Apple, making up about 18% of its total revenue in the fourth quarter. The company accounted for 19% of China’s smartphone market in the first quarter, up from 15% a year earlier, per Counterpoint.

Rani Molla4/16/26

Anthropic has surged past OpenAI in capturing business spending on generative-AI software

Last quarter, Anthropic attracted the lion’s share of trackable business spending on generative-AI software, according to new data from Ramp, a fintech company that provides corporate cards and expense management software for small firms and Fortune 500 companies alike.

The data showed that in the first quarter, Anthropic saw 37% of spending, its biggest share yet, versus 33% for OpenAI. Notably, the dataset doesn’t capture spending by Google or Microsoft.

OpenAI, which makes ChatGPT, still leads in overall adoption at 81% of AI buyers, but Anthropic is catching up, at nearly 63% in March. Overall, more than half of Ramp’s customers currently pay for AI, up from just 18% two years ago.

Anthropic’s enterprise tools, including Claude Code and Cowork, have been making waves among the business class, sending its revenue soaring.

Anthropic’s revenue share is even higher among companies spending on AI for the first time.

“Anthropic has definitely been on a tear,” Ara Kharazian, Ramp’s economist, told Sherwood News. “Its increase in adoption rates has been driven by its ability to sell to less technical users and smaller contracts than it typically has.”

It’s notable that midway through the first quarter, Anthropic had a falling-out with one of its biggest customers, the US government, which near the end of February decided to shun Anthropic’s products and lean into working with OpenAI.

Jon Keegan

4/16/26

Anthropic releases Claude Opus 4.7, with better coding, better vision, and occasional doom loops

The incremental update of Anthropic’s most capable public model includes steady improvements to coding and new ways to blow past your token budget.

Tunnel. Optical illusion. Abstract striped background. Vector illustration.

Jon Keegan4/16/26

Report: Google ditches its objection to defense work, pitches Gemini to Pentagon

In 2018, Google employees protested against the company’s tech being used for the US military’s Project Maven — a drone targeting program — reminding the company of its “don’t be evil” motto.

After the controversy, the company declined to renew the contract with the Pentagon, drawing a bright line between Big Tech and the national security establishment.

What a difference a few years makes.

Google is now actively working to get its Gemini AI model to be used in classified national security settings, according to a new report from The Information. Seeking a similar deal to the one OpenAI hashed out with the Pentagon, Google reportedly wants a contract that allows use of Gemini in classified work, but with a prohibition on mass domestic surveillance and autonomous lethal weapons.

But Google is playing catch-up in a major way. Amazon and Microsoft both have been widely used for classified defense work, and contractors are already experienced in working with their cloud systems, while Google’s services have never been used in classified work.

Google and Pentagon Discuss Classified AI Deal as Company Rebuilds Military Ties