tech
Big Tech earnings season and the capex spiral
Big Tech's AI spending is soaring, but higher capex may reflect inflation as much as expansion this earnings season.
TL;DR
- Big Tech's upcoming earnings reports will focus on AI data center spending plans.
- Companies like Google, Amazon, Microsoft, and Meta plan to spend over $700 billion this year on AI infrastructure.
- The cost of building AI capacity has increased by approximately 20% due to shortages in components, materials, and labor.
- Higher capital expenditure may partly reflect inflation, with estimates suggesting 20-30% of increased spending is due to rising prices.
- Investors should look for details on power capacity, GPU deployments, and memory purchases to gauge genuine expansion versus increased costs.