{"id":42482,"date":"2023-11-05T16:49:50","date_gmt":"2023-11-05T16:49:50","guid":{"rendered":"https:\/\/innodebt.com\/business\/tech-giants-pour-billions-into-cloud-capacity-in-ai-push\/"},"modified":"2023-11-05T16:49:50","modified_gmt":"2023-11-05T16:49:50","slug":"tech-giants-pour-billions-into-cloud-capacity-in-ai-push","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=42482","title":{"rendered":"Tech giants pour billions into cloud capacity in AI push"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=f01529ad-88ca-456e-ad41-d6b7d449a409\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Amazon, Microsoft and Google parent Alphabet look set to ramp up capital spending, as the world\u2019s biggest cloud computing groups build up capacity to serve the growth of generative artificial intelligence.<\/p>\n<p>The Big Tech groups, which together dominate the global cloud market, have boosted investment in computing infrastructure over the past few years.<\/p>\n<p>Capital spending rose to a combined $42bn in the three months to September, almost 20 per cent more than the same period in 2021. That figure, which comprises reported corporate capex from Alphabet and Microsoft and Amazon\u2019s businesswide investment in property and equipment, marked a 10 per cent rise from the quarter to June. Analysts expect the pace of cloud-related spending to accelerate next year. <\/p>\n<p>Executives from the companies said last month that significant chunks of capital spending are going towards the generative AI systems that require huge amounts of computing power and data-crunching. Amazon chief executive Andy Jassy predicted that generative AI will drive \u201ctens of billions in revenues\u201d. <\/p>\n<p>The three tech giants are vying to increase their shares of the cloud market \u2014 the business drives Amazon\u2019s overall profits in particular \u2014 and must remain competitive in AI to hold on to their customers. Each wants to win new customers with a suite of state of the art AI tools and services, and use the technology to enhance other core products. <\/p>\n<p>The rivals \u201chave to compete on generative AI or they\u2019ll lose relevance and market share\u201d, said Jeff Pearson, managing director at technology consultancy Slalom.\u00a0\u201cAll that is going to require a tremendous amount of capex\u201d, for equipment such as servers and data centres.<\/p>\n<figure class=\"n-content-image n-content-image--full\"><picture><source media=\"(min-width: 700px)\"  width=\"1575\" height=\"1125\"><\/source><source media=\"(max-width: 490px)\"  width=\"675\" height=\"900\"><\/source><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/11\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/a4aa6910-7a5e-11ee-85f3-618d0fce49cc-standard.png\" alt=\"Column chart of $bn showing Microsoft, Amazon and Alphabet's collective cloud capex is expected to grow\" data-image-type=\"graphic\" width=\"1575\" height=\"1125\"><\/picture><\/figure>\n<p>Bank of America analysts predict the collective cloud-related capex of Amazon, Alphabet and Microsoft will rise at an accelerated 22 per cent next year to $116bn. This year they raised their 2023 forecast from no growth to 14 per cent. Last year the companies\u2019 combined investment increased 20 per cent from 2021 to $84bn, BofA said. <\/p>\n<p>Microsoft is \u201cramping up\u201d investment at the fastest pace to support \u201can uptick in AI workloads\u201d and their broader cloud business, said BofA analyst Justin Post. All three companies, however, were \u201cinvesting ahead of future revenues\u201d, he added.<\/p>\n<p>Amazon\u2019s quarterly investment figures include assets for its retail business, which it invested heavily in during the pandemic. Analysts said the fall in Amazon\u2019s third-quarter investments, compared with last year, reflected a pullback in ecommerce spending. Amazon said in October its retail capex would fall this year while its cloud-related investment would rise.<\/p>\n<p>The need for huge amounts of costly computing capacity to develop generative AI has pushed AI start-ups to seek partnerships with the Big Tech groups. Microsoft took an early lead and signed an exclusive deal with start-up OpenAI, now seeking a valuation of $86bn. The tie-up gives Microsoft\u2019s customers access to the technology behind ChatGPT. <\/p>\n<p>Microsoft this month became the first in the industry to make the technology behind ChatGPT available as a standard feature in a widely used software product, with the launch of its Copilot generative AI assistant. The upgrade will add as much as 83 per cent to businesses\u2019 monthly software bill.<\/p>\n<figure class=\"n-content-image n-content-image--full\"><picture><source media=\"(min-width: 700px)\"  width=\"1575\" height=\"1125\"><\/source><source media=\"(max-width: 490px)\"  width=\"675\" height=\"900\"><\/source><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/11\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/a4cd0f70-7a62-11ee-9459-39c979e8c8d6-standard.png\" alt=\"Line chart of Quarterly investment, $billions showing Investments tick up this year as Big Tech companies grow their AI offerings\" data-image-type=\"graphic\" width=\"1575\" height=\"1125\"><\/picture><\/figure>\n<p>Microsoft said AI-related demand delivered an unexpected boost to cloud growth in the most recent quarter. Alphabet and Amazon were vaguer in their earnings reports about the impact of their AI investment.<\/p>\n<p>None of the three has \u201cunique advantages on the capex side\u201d, said Charles Fitzgerald, an angel investor and former Microsoft executive. \u201cAll have a ton of money on the balance sheet. All are committed to leading in the AI era, so will spend what needs to be spent.\u201d<\/p>\n<p>The focus on growing a capital-intensive business could squeeze margins, analysts warned. High levels of capex were \u201cnot going to show up right away\u201d but could be a \u201cheadwind\u201d to margins over time and also hit cash flow, said BNP Paribas analyst Stefan Slowinski.<\/p>\n<p>Alphabet said in October that it was committed to \u201cre-engineering our cost base\u201d to \u201ccreate capacity\u201d for AI-related investments. Microsoft said margins \u201cmay decrease\u201d as a result of cloud and AI investments.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/f01529ad-88ca-456e-ad41-d6b7d449a409\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Amazon, Microsoft and Google parent Alphabet look set to ramp up capital spending, as the world\u2019s biggest cloud computing groups build up capacity to serve the growth of generative artificial intelligence. The Big Tech groups, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-42482","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tech giants pour billions into cloud capacity in AI push | Innodebt<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Amazon, Microsoft and Google\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/innodebt.com\/?p=42482\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tech giants pour billions into cloud capacity in AI push | Innodebt\" \/>\n<meta property=\"og:description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Amazon, Microsoft and Google\" \/>\n<meta property=\"og:url\" content=\"https:\/\/innodebt.com\/?p=42482\" \/>\n<meta property=\"og:site_name\" content=\"Innodebt\" \/>\n<meta property=\"article:published_time\" content=\"2023-11-05T16:49:50+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/11\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/a4aa6910-7a5e-11ee-85f3-618d0fce49cc-standard.png\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/innodebt.com\/?p=42482#article\",\"isPartOf\":{\"@id\":\"https:\/\/innodebt.com\/?p=42482\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/innodebt.com\/#\/schema\/person\/742362d9a293429cc45829acf21919b4\"},\"headline\":\"Tech giants pour billions into cloud capacity in AI push\",\"datePublished\":\"2023-11-05T16:49:50+00:00\",\"dateModified\":\"2023-11-05T16:49:50+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/innodebt.com\/?p=42482\"},\"wordCount\":709,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/innodebt.com\/#organization\"},\"articleSection\":[\"Business\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/innodebt.com\/?p=42482#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/innodebt.com\/?p=42482\",\"url\":\"https:\/\/innodebt.com\/?p=42482\",\"name\":\"Tech giants pour billions into cloud capacity in AI push | Innodebt\",\"isPartOf\":{\"@id\":\"https:\/\/innodebt.com\/#website\"},\"datePublished\":\"2023-11-05T16:49:50+00:00\",\"dateModified\":\"2023-11-05T16:49:50+00:00\",\"description\":\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Amazon, Microsoft and Google\",\"breadcrumb\":{\"@id\":\"https:\/\/innodebt.com\/?p=42482#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/innodebt.com\/?p=42482\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/innodebt.com\/?p=42482#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/innodebt.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Tech giants pour billions into cloud capacity in AI push\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/innodebt.com\/#website\",\"url\":\"https:\/\/innodebt.com\/\",\"name\":\"Funding Factories\",\"description\":\"Latest Finance News and Updates\",\"publisher\":{\"@id\":\"https:\/\/innodebt.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/innodebt.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/innodebt.com\/#organization\",\"name\":\"Funding Factories\",\"url\":\"https:\/\/innodebt.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/innodebt.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png\",\"contentUrl\":\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png\",\"width\":780,\"height\":140,\"caption\":\"Funding Factories\"},\"image\":{\"@id\":\"https:\/\/innodebt.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/innodebt.com\/#\/schema\/person\/742362d9a293429cc45829acf21919b4\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/innodebt.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png\",\"contentUrl\":\"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/innodebt.com\"],\"url\":\"https:\/\/innodebt.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Tech giants pour billions into cloud capacity in AI push | Innodebt","description":"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Amazon, Microsoft and Google","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/innodebt.com\/?p=42482","og_locale":"en_US","og_type":"article","og_title":"Tech giants pour billions into cloud capacity in AI push | Innodebt","og_description":"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Amazon, Microsoft and Google","og_url":"https:\/\/innodebt.com\/?p=42482","og_site_name":"Innodebt","article_published_time":"2023-11-05T16:49:50+00:00","og_image":[{"url":"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/11\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/a4aa6910-7a5e-11ee-85f3-618d0fce49cc-standard.png"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/innodebt.com\/?p=42482#article","isPartOf":{"@id":"https:\/\/innodebt.com\/?p=42482"},"author":{"name":"News Room","@id":"https:\/\/innodebt.com\/#\/schema\/person\/742362d9a293429cc45829acf21919b4"},"headline":"Tech giants pour billions into cloud capacity in AI push","datePublished":"2023-11-05T16:49:50+00:00","dateModified":"2023-11-05T16:49:50+00:00","mainEntityOfPage":{"@id":"https:\/\/innodebt.com\/?p=42482"},"wordCount":709,"commentCount":0,"publisher":{"@id":"https:\/\/innodebt.com\/#organization"},"articleSection":["Business"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/innodebt.com\/?p=42482#respond"]}]},{"@type":"WebPage","@id":"https:\/\/innodebt.com\/?p=42482","url":"https:\/\/innodebt.com\/?p=42482","name":"Tech giants pour billions into cloud capacity in AI push | Innodebt","isPartOf":{"@id":"https:\/\/innodebt.com\/#website"},"datePublished":"2023-11-05T16:49:50+00:00","dateModified":"2023-11-05T16:49:50+00:00","description":"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Amazon, Microsoft and Google","breadcrumb":{"@id":"https:\/\/innodebt.com\/?p=42482#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/innodebt.com\/?p=42482"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/innodebt.com\/?p=42482#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/innodebt.com\/"},{"@type":"ListItem","position":2,"name":"Tech giants pour billions into cloud capacity in AI push"}]},{"@type":"WebSite","@id":"https:\/\/innodebt.com\/#website","url":"https:\/\/innodebt.com\/","name":"Funding Factories","description":"Latest Finance News and Updates","publisher":{"@id":"https:\/\/innodebt.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/innodebt.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/innodebt.com\/#organization","name":"Funding Factories","url":"https:\/\/innodebt.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/innodebt.com\/#\/schema\/logo\/image\/","url":"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png","contentUrl":"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/ff-dark-logo-1.png","width":780,"height":140,"caption":"Funding Factories"},"image":{"@id":"https:\/\/innodebt.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/innodebt.com\/#\/schema\/person\/742362d9a293429cc45829acf21919b4","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/innodebt.com\/#\/schema\/person\/image\/","url":"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png","contentUrl":"https:\/\/innodebt.com\/wp-content\/uploads\/2023\/08\/avatar_user_1_1693518183-96x96.png","caption":"News Room"},"sameAs":["https:\/\/innodebt.com"],"url":"https:\/\/innodebt.com\/?author=1"}]}},"_links":{"self":[{"href":"https:\/\/innodebt.com\/index.php?rest_route=\/wp\/v2\/posts\/42482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/innodebt.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/innodebt.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/innodebt.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/innodebt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42482"}],"version-history":[{"count":0,"href":"https:\/\/innodebt.com\/index.php?rest_route=\/wp\/v2\/posts\/42482\/revisions"}],"wp:attachment":[{"href":"https:\/\/innodebt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/innodebt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/innodebt.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}