Chapter 1: What is the AI spending race and why is it important?
Welcome to the podcast. I'm your host, Jaden Schaefer. So I'm not going to lie.
Chapter 2: How much is Amazon spending on capital expenditures for AI?
I feel like recently it feels a lot like in AI and just the industry in general, it's turned into a giant contest of who can spend the most money on data centers. I think it makes sense from a logical perspective, right?
Chapter 3: What are the spending projections of Amazon's competitors in AI?
Basically, the more data centers you have, you have more compute and the more compute you have, your AI systems get better. And if you have a better AI system, you're ultimately going to, you know, get the most customers and you're going to be like the the king of the AI era of, you know, the tech era of AI. So I think it makes a lot of sense.
And that logic though, I do think it has some limits in a lot of different industries. You know, your long-term success is still going to come down to how much money you make.
Chapter 4: How is AWS performing amidst massive capital expenditures?
And if you're making more money than you spend. So I think right now we have this kind of interesting moment where with big tech, the compute, you know, you could call it an arms race, but it's basically everyone is spending insane amounts of money. And that's sort of what is happening dictating who's going to be the winner.
So if that is the game though, I think right now Amazon is definitely in the lead. So today on the podcast, I want to break down recent earnings reports from Amazon and also want to talk a little bit about Google and Amazon and how they are spending on CapEx because it is absolutely insane.
Before we get into all of that, I wanted to make a huge announcement about my own startup, which is AI Box Dot AI.
Chapter 5: What are investors' concerns regarding AI spending by tech giants?
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Instead of having $20 a month subscriptions on Anthropic and OpenAI and a dozen other platforms, you can spend nine bucks a month and get access to all of it. We've also added a bunch of higher priced tiers. So we used to only be 20 bucks a month. We've now added a 40 and $80 tier. We had a bunch of people that were, you know, really power users doing a lot of cool stuff with audio and image.
And so now you have the ability to get higher tiers if you want more tokens, more credits, especially once you start building things on the builder, automating a lot of your workflows. So there's some really exciting stuff. If you want to go check it out, get access to all of that, go check out AIbox.ai.
Chapter 6: How does Amazon's cloud business contribute to its AI strategy?
You can now get a $9 a month tier and also $40 and $80 a month tiers for more tokens. I'll leave a link in the description to AIbox.ai. I think right now, the thing that a lot of people are talking about is Amazon when it comes to how much is getting spent on AI. They did a recent earnings report on Thursday, and they said that they expect to spend about $200 billion on CapEx through this year.
So a lot of that's getting spent on AI, custom chips, robotics, and also low Earth orbit satellites. I think this is a really big increase from the $131 billion it spent last year.
Chapter 7: What does the future of AI and tech spending look like?
So, I mean, almost, I mean, it's not quite double, but 200 billion from 131 billion, like that is a massive jump.
Now, while I think it would be tempting for them and any company to give all of that to AI with just given the industry and everything that's going on right now, I think Amazon is a little bit unique among a lot of other tech companies because they also, in addition to having, you know, a big tech face, they also operate a massive physical footprint, right?
A lot of that is being retrofitted for robotics and automation, which makes it a lot harder to kind of dismiss the non-AI portion of their capital budget. But if you look at other companies too in the space, like Google's not far behind. Google said on Wednesday that they're expecting to spend $175 billion to $185 billion in CapEx this year, which is up from $91 billion the year before.
These are massive jumps going from 91 billion to 175 billion or from 130 billion to 200 billion. Like these, these numbers are just going crazy. Meta also had their earnings report last week and they projected between 115 and 135 billion in CapEx for this year. Oracle, which was, you know, once seen as basically, you know, one of the major beneficiaries of the AI infrastructure boom.
I mean, they have the $500 million portfolio. Open AI and SoftBank deal that they're doing to build data centers and infrastructure. But even Oracle is expecting to spend, you know, not quite as much, $50 billion this year. So I think Microsoft hasn't yet said how much they're going to be spending this year.
But I think a bunch of, you know, recent quarterly CapEx expenditure totals were about $37.5 billion this And that kind of annualizes to about $150 billion. If they're spending that they have going on right now, if that remains steady, Microsoft should be at about 150.
So I think that increase has also drawn investor scrutiny, but I think still Microsoft is far behind Amazon and Google just in overall spending because those companies are, it's absolutely insane. So I think if you look at it from inside the tech industry, it makes sense why they're doing this.
If AI is really going to reshape the economy, then whoever has the most high-end compute is going to become the person that has this really scarce resource. And this is globally too. So I think whatever company controls their own supply right now is going to survive. Everyone else is going to get bidded out. It's going to get pretty...
um you know it's gonna get pretty crazy and you even have people like elon musk who's you know gonna be building data centers in space because he said you know the earth doesn't have enough uh compute and energy and yeah you know all this other stuff so that's kind of his solution so i think um with all of that some of the biggest tech companies right now are just trying to race to prepare for basically a future that is defined by compute scarcity this is something i think we're going to have to live with
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