Despite pouring $1 billion every single day into CapEx for data centers and related equipment, Microsoft, AWS, Google Cloud, and Oracle all say that AI and cloud demand is outstripping supply and is likely to remain that way until the end of 2025.
That wasn’t a typo — those four companies are investing $1 billion every single day — $41.67 million every single hour, $11,574 every single second — including holidays and weekends.
And they still can’t keep up with surging demand from businesses across the globe that are banking on the cloud and AI services from the hyperscalers to help transform those enterprises for the AI-powered economy.
Amazon CEO Andy Jassy captured this astonishing reality very nicely during his company’s recent Q2 earnings call:
“So I feel good about the inputs and the services that we’re offering to customers across AI as well as non-AI, and we have more demand than we have capacity right now. So we could be doing more revenue and helping customers more, and we’re working very hard on changing that outcome and how much capacity we have, but it’s still like if you look at the business, it’s $123 billion annual revenue run rate business and it’s still early.
“I mean, how often do you have an opportunity that’s $123 billion of annual revenue run rate where you say it’s still early? It’s a very unusual opportunity that we’re very bullish about.”
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And I get that you might be saying, “Yeah, sure, but it’s just not possible that they’re spending a combined $1 billion per day!” So here’s where that figure comes from:
- Google Cloud: On Alphabet’s Q2 earnings call, CFO Anat Ashkenazi said Q2 CapEx was $22.4 billion, and that the company was raising its projected CapEx spending for the year from $75 billion to $85 billion. So for Google Cloud in Q2, that’s about $22 billion.
- Microsoft: On Microsoft’s fiscal-Q4 earnings call, CFO Amy Hood said that CapEx for the quarter ended June 30 was $24.2 billion, with about $18 billion of that going to data centers and related hardware. Hood also said that her Q1 guidance for CapEx had been more than $30 billion, and that quarterly totals will vary. So I split the difference and put Microsoft in for $27 billion.
- AWS: CFO Brian Olsavsky said Q2 CapEx was $31.6 billion, and would likely remain at that level for the rest of the year. So from AWS, there’s $31.6 billion.
- Oracle: CEO Safra Catz said CapEx for the fiscal Q4 ended May 31 was $9.1 billion.
The CEOs of each company said they see no letup in demand, with some indicating it could still be growing. All said that in spite of their best efforts, they don’t expect to be able to meet all demand until the end of this year or perhaps even into 2026.
If we do our sums, that’s Google Cloud’s $22.4 billion + Microsoft’s $27 billion + AWS’s $31.6 billion + Oracle’s $9.1 billion = $90.1 billion. With 91 days in the quarter, that’s $990.1 million every single dang day, and I took the liberty of rounding up to $1 billion.
Final Thought
And that means that business leaders across every industry are racing to tap into the AI and cloud services that will help them transform their “traditional” businesses into ones that leverage the full power of AI and the cloud to be able to grow more aggressively, make better decisions more rapidly, and dazzle their customers with innovative products and services elegantly aligned with what those customers want and need.
Which means that in this unfolding AI economy, we have to expand our Cloud Wars motto to include the customers’ customers: In the Cloud Wars, the biggest winners are always — always! —the customers and their customers!
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