Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
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In today’s Cloud Wars Minute, I explore how major tech companies like Microsoft, Google, Amazon, and Oracle are navigating the high-stakes world of AI and cloud infrastructure by investing billions.
Highlights
00:26 — Over the next 12 months, the four hyperscalers will be spending almost a quarter of a trillion dollars on capex to build out the infrastructure needed for all that horsepower coming through cloud data centers — these AI training and inference engines. How will Microsoft, Google, Amazon, and Oracle be able to make these investments without passing costs on to customers?
01:21 — I don’t think this is an environment where these companies can say, “Hey, this stuff is expensive, and dear customers, we love you, but we’re going to pass these costs on to you through higher prices.” Here’s what they said they spent on CapEx during calendar Q2: Microsoft spent $19 billion, Amazon $17 billion, Google $13 billion, and Oracle $7 billion.
02:27 — All of these companies said they’re going to spend at least that much, or more, in the coming quarters because they just have to provide the horsepower to fuel this cloud and AI revolution. At Oracle, Larry Ellison mentioned that these data center wars are getting bigger and more sophisticated all the time. Ellison has been using the term “AI data centers.”
03:09 — Satya Nadella, the CEO of Microsoft, said that you must do a couple of things simultaneously: You need to invest aggressively in building out data center shells and be prepared to fill them as fast as necessary, based on what he called “demand signals” from customers in the marketplace.
04:18 — My point is that these four remarkable companies now understand that they have to spend like no four companies ever have before to be in a position to reap the rewards. But how do they do that? How do they drive innovation to ensure that they don’t have to tell customers, “Too bad, we’re passing the costs on to you,” because I don’t think customers will accept that.
