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There's no official leaderboard for AI spending in Big Tech, but companies are competing like there is one.
Tech giants' intent to pour billions of dollars into their AI bets remains unwavering. Microsoft jumped ahead this time, announcing plans to spend $190 billion in capital expenditures this year.
With four companies and more than $12 trillion in market cap reporting in one day, there's a lot to unpack.
Amazon: AWS enjoyed its best growth since 2022, with sales jumping 28% last quarter. And there are more opportunities ahead. Amazon hinted it could start selling its Trainium AI chips to external customers within the next two years.
Amazon didn't adjust its capital expenditure plans — last quarter it said it planned to spend $200 billion this year — but there was a noticeable drop in its free cash flow. Like … a 95% drop compared with the same quarter last year.
CEO Andy Jassy said it takes time for the value of those investments to manifest, but acknowledged the short-term pain.
"However, in times of very high growth, like now, where the capex growth meaningfully outpaces the revenue growth, the early years, free cash flow is challenged," he said.
P.S. to the shoppers: The Prime Day sale is moving from July to June.
Google: Subs are on the rise at the search giant, and executives are crediting AI. CFO Anat Ashkenazi said Google One subscriptions "benefited from increased demand for AI plans." The company's subscriptions, platforms, and devices business grew 19%, and Google says it has 350 million paying subscribers across its services.
It's an interesting twist for a company whose bread and butter is advertising. Google isn't straying too far from the path, though.
Chief business officer Philipp Schindler said Google was open to including ads on its Gemini App.
"If done well, ads can be really valuable," he said.
Google would know!
Meta: Does Mark Zuckerberg love anything as much as spending big on AI? It's tough to say. Yet again, the Meta CEO told investors its capex spending will grow to keep pace in the AI race.
But Meta CFO Susan Li isn't sweating it. She said the company runs "a very sort of ROI based process to make sure that we are funding all of the ads initiatives that we think will drive growth in future years."
One thing Li hasn't cracked the code on: How many employees Meta actually needs.
Li said she "doesn't really know" what the company's ideal headcount looks like. "I think there's a lot of change right now, with AI capabilities advancing rapidly," she said.
That's tricky considering the company has already committed to cutting 10% of its workforce next month.
Microsoft: It's not letting up on spending, but headcount is another story. CFO Amy Hood expects to reduce employee headcount in the coming quarters.
"We continue to evolve how we operate to increase our pace and agility, and therefore we expect headcount will decrease year over year," Hood said.
That's in line with what Hood said in an internal memo viewed by BI's Ashley Stewart. The CFO praised Microsoft workers' "increased pace" and "tighter, more accountable squads."
