The Morning Download: Big Tech's Ever-Bigger AI Bets

Good morning. The biggest takeaway from Wednesday's earnings extravaganza could be that we're going to need a bigger lens to make sense of the AI spending spree.

Meta Platforms increased its projected capex for the year to $125  to $145 billion. Microsoft followed with a projected boost to $190 billion. Both come on top of figures already disclosed by the other two tech giants that reported earnings: Alphabet is guiding to $180 to $190 billion, nearly double 2025, and Amazon has committed around $200 billion, a 60% increase.

Taken together, the numbers reflect deep confidence — nobody commits this much capital without believing the demand on the other side is real, and sales are growing at the four companies. But they also reflect a realization that even after spending the equivalent of several Apollo space programs, it may not be enough.

“Broad and growing customer demand continues to exceed supply,” Microsoft Chief Financial Officer Amy Hood said Wednesday. “We remain confident in the return on these investments.”

Here's the Journal's Robbie Whelan on the topic: "There are demand-driven capacity crunches in everything from fiber-optic cabling to electric power to water for cooling chip factories to undeveloped land for data centers."

Consider: Meta is keeping servers running past their replacement date because of a memory-chip shortage, as the Journal earlier reported. 

In a response to a question on the investor call Wednesday about 2027 spending plans, Meta’s finance chief, Susan Li, had this to say.

“Our experience so far has been that we have underestimated our compute needs, even as we have been ramping capacity significantly,” she said. “So our expectation is that compute will become even more central to the business going forward.”

All that demand has to land somewhere. The clearest place to see it is in the cloud businesses, where AI is driving cloud growth and cloud is driving AI revenue right back. Amazon's earnings made the case most directly. More below.

Amazon said on Wednesday that its advantages in cloud-computing and big spending on data centers are turning into benefits for its AI business.

That’s according to CEO Andy Jassy, who touted that Amazon Web Services revenue grew 28%—the fastest pace since 2022—in part because businesses building new AI agents want to do so in the same infrastructure where they keep their cloud services and data. Amazon's growing lineup of AI chips is also part of the draw.

That has been the play from the start for cloud providers like AWS, who’ve been shouting from the rooftops that customers want to use AI in the same place they run their cloud infrastructure—even as it reignites age-old CIO fears of vendor lock-in. The pitch got easier this week: On Tuesday, Amazon said its customers would be able to access OpenAI’s latest models, after the startup revised the terms of its partnership with Microsoft.

Alphabet told a similar story: Its cloud division, which sells access to AI platforms and computing power, had $20 billion in first-quarter revenue, a 63% increase from the same period in 2025. The company said its cloud backlog growth was driven by demand for its enterprise AI tools and its custom chips, known as Tensor Processing Units, or TPUs.

Microsoft made the case too, though with more strain. Microsoft's cloud platform, Azure, has become the infrastructure backbone for OpenAI and other companies building AI applications, and the unit posted 40% growth — in line with expectations.

Azure is racing to serve both rising customer demand and Microsoft's own needs for running its AI products. "We're doing our best to be able to get things in as quickly as we can," Hood said, concerning infrastructure development

Overall, the company’s Intelligent Cloud unit, which includes its AI infrastructure and Azure cloud computing businesses, reported $13.2 billion in operating income, lower than the $14.1 billion predicted by analysts.

Anthropic had proposed letting about 70 more companies use the tool, on top of the roughly 50 critical-infrastructure organizations already onboard.

Softbank plots new venture. Roze AI will focus on the intersection of artificial intelligence and robotics and it could include some of the Japanese conglomerate’s existing energy, land and infrastructure. Softbank plans to take the new venture public as soon as the second half of the year, the WSJ reports.

A is for AI. Silicon Valley is seeing a proliferation of new schools started and funded by local tech executives for their kids. “They need safe harbors for their quirky, genius children," Michael Prater, a veteran East Coast education leader who helped design one such program, tells the Journal. 

Musk takes the stand. On the witness stand Wednesday in his lawsuit against OpenAI, Elon Musk said he was a “fool” to back the AI startup when it was a nonprofit. “I gave them $38 million of essentially free funding to create what would become an $800 billion company.” Musk later expressed frustration on cross examination at questions about potential tax breaks he might have received as a result of his donations and his role in helping start the company. “Your questions are not simple,” he said. “They’re designed to trick me essentially.”

OpenAI sued. Families of seven victims in a February mass shooting in Tumbler Ridge, British Columbia are suing OpenAI over its failure to flag the shooting suspect’s ChatGPT activity to police.

Federal Reserve Chair Jerome Powell said Wednesday that he would stay on the central bank’s board after his chairmanship ends next month to defend the institution from what he called unprecedented legal attacks from the Trump administration. (WSJ)

Just weeks after President Trump declared the Strait of Hormuz “COMPLETELY OPEN AND READY FOR BUSINESS” only to see ship traffic stall, the administration is now asking other countries to join a new international coalition that would enable ships to navigate the waterway. (WSJ)

The House took a major step late Wednesday toward funding the Department of Homeland Security’s immigration-enforcement arms, passing a budget framework after GOP holdouts agreed to drop their five-hour blockade and back the measure. (WSJ)

The Supreme Court on Wednesday sharply restricted states from using race to draw voting districts that help minority communities elect their preferred candidates. (WSJ)

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