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BACKGROUND

If you’re new here, check out the last few editions on using AI for investment analysis, creating customized news feeds and tracking earnings call mentions:

• Tracking DeepSeek on Earnings Calls: From Zero to 100+ Mentions

• Demo: AI Agents in Market Analysis

• ChatGPT's Task Scheduling: Automated Market Analysis

• Effective Prompts For Investment Research

As a reminder, this is not investment advice.

CAP EX

AI Spending Speeds Up

On Jan. 27, Nvidia's stock plunged 17%, erasing $600 billion in market value after DeepSeek's announcement of a cost-efficient, open-source chatbot that matched proprietary models.

Investors feared the efficiency breakthrough would curb demand for its chips.

This week, major tech companies reported significant increases in their AI infrastructure spending.

I asked DoTadda, a tool that uses large language models including ChatGPT and Claude, to analyze what Amazon, Meta, Microsoft and Alphabet said about their AI capital expenditures plans in their most recent earnings call transcripts.

Here’s the question:

According to their most recent earnings calls, what have amazon, meta, microsoft and alphabet said about demand for AI computing power?

The tool searches through earnings call transcripts and extracts discussions about AI infrastructure and spending.

Below is the output without the underlying earnings calls. I've kept them out of the newsletter to avoid hitting email spam filters (the full transcripts would push this to ~7,000 words!). If you want to see the complete results (which includes Claude’s analysis), click here.

But here are a few things that stick out to me:

Far from slowing, AI demand is outstripping even the industry's ability to build capacity.

From Amazon's CEO:

• Meta's Scale-Up: They're bringing a gigawatt of capacity online this year alone, plus constructing a 2+ gigawatt AI data center that Zuckerberg noted would 'cover a significant part of Manhattan if it were placed there.'

• Microsoft's Revenue Surge: Microsoft's AI business hit a $13 billion annual revenue run rate, up 175% year-over-year. But even this massive growth is constrained - Microsoft explicitly noted they expect to be 'AI capacity constrained in Q3.'

• Google's Compute Explosion: Perhaps most telling is Google's data point: their cloud customers now consume more than 8x the compute capacity compared to just 18 months ago (!)

What’s helpful is how expansive these results are with such an open-ended question. If you want more details on DoTadda, check them out here.

DOTADDA

Original Question

According to their most recent earnings calls, what have amazon, meta, microsoft and alphabet said about demand for AI computing power?

Extracted Companies

• Amazon.com Inc (AMZN)

• Meta Platforms Inc (META)

• Microsoft Corporation (MSFT)

• Alphabet Inc (GOOG)

Selected Transcripts:

1. AMZN: Q4 Earnings Call, 2025-02-06, Q4 2024

2. META: Q4 Earnings Call, 2025-01-29, Q4 2024

3. MSFT: Q2 Earnings Call, 2025-01-29, Q2 2025

4. GOOG: Q4 Earnings Call, 2025-02-04, Q4 2024

o1-preview Final Answer

Amazon, Meta, Microsoft, and Alphabet are experiencing unprecedented demand for AI computing power, leading to significant investments in AI infrastructure, custom chip development, and capacity expansion. Each company is aggressively scaling its AI capabilities to meet this surging demand, despite facing supply constraints and infrastructure challenges.

Key Metrics and Trends

• Amazon AWS Annualized Revenue Run Rate: $115 billion

• AWS Q4 Year-over-Year Growth: 19%

• AWS Capital Investments in Q4 2024: $26.3 billion

• Meta's Planned AI Data Center Capacity:

  • 1 gigawatt coming online this year

  • Building a 2+ gigawatt AI data center

• Meta AI Monthly Active Users: 700 million

• Microsoft's AI Annual Revenue Run Rate: $13 billion, up 175% year-over-year

• Microsoft Cloud Revenue: $40.9 billion, up 21%

• Azure AI Services Growth: 157% year-over-year

• Microsoft Capital Expenditures in Q2 2025: $22.6 billion

• Alphabet Google Cloud Q4 Revenue: $12 billion, up 30%

• Google Cloud Operating Income: Increased to $2.1 billion, operating margin up to 17.5%

• Alphabet's AI Infrastructure Compute Capacity: Customers consume over 8x the compute compared to 18 months ago

• Alphabet's Trillium TPU Performance: 4x better training performance, 3x greater inference throughput than previous generation

In-Depth Analysis

Massive Investments in AI Infrastructure to Meet Explosive Demand

The tech giants are pouring resources into expanding their AI infrastructure to accommodate the surging demand for AI computing power. Amazon's AWS invested $26.3 billion in capital expenditures in Q4 2024, primarily focusing on AI.

Meta is investing hundreds of billions of dollars over the long term, aiming to bring almost a gigawatt of capacity online this year and building a 2 gigawatt and potentially bigger AI data center.

Microsoft has more than doubled its data center capacity in the last three years, with capital expenditures of $22.6 billion in Q2 2025 to support AI demand.

Alphabet expanded its infrastructure by breaking ground on 11 new cloud regions and data center campuses in 2024, continuing to invest heavily to meet AI demand.

Custom AI Chips to Enhance Performance and Efficiency

To improve performance and cost-efficiency, these companies are developing custom AI chips. Amazon's Trainium2 offers 30% to 40% better price performance than current GPU-powered instances.

Alphabet's Trillium, their sixth-generation TPU, delivers significant performance improvements.

Supply Constraints and Capacity Expansion Efforts

Despite investments, supply constraints are a common challenge. Amazon acknowledges that capacity limitations are hindering growth.

Microsoft is in a tight supply-demand situation, working hard to expand capacity.

Alphabet is similarly focused on alleviating supply pressures.

Growing Revenue from AI Services and Cloud Offerings

The escalating demand is reflected in substantial revenue growth. Microsoft's AI business reached an annual revenue run rate of $13 billion, a 175% increase year-over-year.

Amazon's AWS boasts a multibillion-dollar annualized revenue run rate in AI, growing at triple-digit percentages.

Alphabet's Google Cloud revenue increased by 30% to $12 billion, propelled by AI infrastructure and generative AI solutions.

Strategies to Capture Future AI Computing Demand

Companies are strategically positioning themselves to capture future demand. Amazon is collaborating with Anthropic on Project Rainier, utilizing Trainium2 Ultra servers.

Microsoft's partnership with OpenAI strengthens its AI ecosystem.

Meta aims to lead in AI assistants with Meta AI, expecting to reach over 1 billion people.

Significant Growth in AI Compute Consumption

There's a notable increase in AI compute usage. Alphabet reports that cloud customers consume over 8x the compute capacity compared to 18 months ago.

This surge underscores the escalating demand and the need for continued infrastructure expansion.

Efficiency and Cost Optimization as Key Focus Areas

Improving efficiency and reducing costs are essential to manage demand. Alphabet emphasizes their commitment to cost optimization.

Microsoft highlights efficiency gains contributing to better price performance.

Supporting Evidence