Dan Gallagher

Meta is spending the most relative to its revenue, and it's going to spend even more.

Like this year is probably going to spend more than half of its revenue on CapEx, which is an obscene amount.

for these companies.

But the stock is up because investors think AI is actually paying off for them.

Microsoft has this like more complex business model where they do software for large corporate customers, for consumers.

There's these mix of like cloud contracts.

They even sell things like Xbox that's in that mix too.

So it's a pretty complicated setup and they're trying to use AI in a number of ways.

One, they're trying to develop it internally to make their own processes better.

They're powering AI computing for companies like OpenAI, which is a very big customer for them.

And they're also trying to drive people like us

to use things like Copilot at work.

Copilot is their AI software that we can use to run spreadsheets, to make PowerPoints, all these sorts of things.

So they have this kind of more complex task.

And one thing the recent report showed is that all these companies don't have as much AI computing capacity as they'd like to have.

They talk about being capacity constrained.

And Microsoft has had to make that different parts of that capacity available for different parts of its business.

And they intentionally decided that

not to put as much capacity towards its cloud business that's the most closely watched by investors.

So the cloud revenue growth wasn't quite what investors wanted to see.