Big Tech’s CapEx spending on AI is on the path higher into the last quarter of 2024. Yahoo Finance anchor Julie Hyman examines hyperscalers Amazon (AMZN), Alphabet (GOOG, GOOGL), Microsoft (MSFT), and Meta Platforms’ (META) investments into generative AI and data centers, putting more fuel into Nvidia’s (NVDA) figurative AI chip fire.
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This post was written by Luke Carberry Mogan.
For our chart of the day.
We’re taking a look at capital spending.
Yah finances Julie.
He joins me now with a closer look.
Yeah, going into earnings season and in particular earnings season for some of the big cap tech companies, we are talking about how much they are spending on a I.
This was highlighted by The Wall Street Journal today in an interesting chart here that looks at the quarterly outlays on capital expenditures and in particular, on what these companies are spending on a I, and then what they’re projected to be.
In particular, we’re talking about Microsoft, Amazon, Google and Meta, the so called hyper scalars that we refer to a lot.
What are they spending on investments in data centres to build out their computing power related to gene generative A. I The short answer is a lot.
The longer answer answer is the forecast here is for the outlay in the fourth quarter to in the third quarter Excuse me to be $60 billion.
That is a 56% year over year gain.
The total projection for the full year $231 billion.49 percent higher than 2023 according to Visible Alpha, as highlighted in the journal.
Now, what are the implications of all of this?
Well, it means a lot more money going into invidious coffers, as you might imagine, and we have to wait until later November likely to get NVIDIA’s earnings.
They have not yet set the specific date for when they’re going to be reporting.
There are implications for what we’re going to hear from those hyper scaler and what they’re going to say in their earnings reports, about how much they’re spending and how investors to react to that.
And then there are implications, obviously, for the bigger ecosystem.
Now it’s on that point that we earlier talked to Chris and of black Rock about how they’re thinking about where to invest.
We’re looking at the A. I trade broadening out, too, so something that we’ve been talking about since the mid year.
I know you highlighted it as one of the, um, top performers, um, and and kind of hitting an all time high.
But we like utilities, um, as another way to play.
We like data centres as another way to kind of get ahead of where that a I trade is going next, not just where it’s been really successful so far.
So another bowl in the Utilities column is another way to continue to play this.
Um, but obviously, uh, judging by these big numbers, it’s not going anywhere, Josh.