In today’s Cloud Wars Minute, I break down the nearly $2.5 trillion in combined backlog reported by the four hyperscalers and explain why I believe the enormous investment in AI infrastructure represents an unprecedented business opportunity — not a sign that the sky is falling.
Highlights
00:02 — With the recent roundup of Q3 numbers from the hyperscalers, and one just before that from Oracle, the hyperscaler backlog now, if we total that all up, adds up to almost $2.5 trillion. And, in an exclusive interview I had with Chicken Little, Chicken Little has recanted its prediction that the sky is falling.
00:35 — I think that we are on the verge of perhaps the greatest industrial revolution, business revolution, and all that the world has ever seen. But, this hand-wringing and negativism and concern about how this early-stage, very, very expensive buildout is going to cripple these extraordinary companies, I think is kind of nuts. And I have some numbers that I think will at least point the way, if not definitively prove, that that will absolutely be the outcome.
01:32 — Microsoft has already got a backlog or RPO of $667 billion, and their projected CapEx spending for the whole year is $170 billion. For Amazon, $578 billion. That’s just AWS’s reported backlog. For the whole company at Amazon, they are projecting CapEx of $220 billion. But, Andy Jassy said that that is overwhelmingly for AWS and the data center buildout.
02:09 — Google’s got a backlog of $561 billion. Parent company Alphabet is projecting about $200 billion in CapEx this year. Again, the overwhelming majority of that going toward Google Cloud. And then Oracle. They’ve got an enormous backlog, $664 billion. They’re expecting to spend about $90 billion on CapEx this year.
03:22 — Now, I know this [CapEx] is a recurring expense, and probably, these numbers will be going up in 2027, but so will this number [RPO] which is much bigger. So, over time, as the backlog and RPO gets bigger, they’ll also start to convert some of this backlog or RPO to revenue, and we’ll see the growth play out in a formal way on the revenue numbers.
05:11 — The leaders of all of these companies are very bullish, and I think it’s time now for [the] Chicken Little example. He’s recanted, or it has recanted — Chicken Little — and I think more of us need to start thinking about the positive outcomes of this rather than all the hand-wringing about whether the sky is falling or not. I don’t think it is.
