In today's Cloud Wars Minute, I look at how the four hyperscalers are now spending a billion dollars every day on CapEx to keep up with explosive AI demand.

Highlights

00:19 — The four hyperscalers — AWS, Microsoft, Google, and Oracle — are now spending, as of Q2, a combined billion dollars a day on CapEx to try to keep up with explosive AI demand. Here's where these numbers come from. And I will say here, I'm calling it Q2, but Oracle's quarter ended May 31.

01:00 — But these are very close for the four CapEx spending numbers for the four hyperscalers: AWS, $31.6 billion; Microsoft, about $27 billion. Google Cloud, $22.4 billion. Oracle, $9.1 billion — far more than Oracle has ever spent before. That's a total of $90.1 billion. We had 91 days in the quarter. So yeah, I cheated a little. It's actually $990.1 million per day. But I got a little crazy.

02:02 — Andy Jassy, the CEO of Amazon said, “You know, this is a new industry. It's pretty crazy. You know, we've built at AWS a $123 billion annualized run rate business, and we're still in the early days.” All of the business leaders are realizing that to be able to compete going forward, they're going to have to turn their businesses into AI-powered enterprises.

03:20 — They don't see this as a one-time seasonal boom that will go back down. They all say, “We think we're going to be spending at these rates going forward.” Oracle CEO Safra Catz, reflecting on the $9 billion that Oracle spent in its quarter ended May 31, said for the coming year, “We are expecting to spend more than $25 billion in CapEx — way more than ever before.”

04:05 — CFO Amy Hood gently guided the questioner through this, saying, “That is a lot of money, there's no question about it. But our RPO, or remaining performance obligation — we have future commitments at Microsoft Cloud for $368 billion in customer contracts, and we don't currently have enough capacity to meet that. It's going to continue to go up.”

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