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Big Tech Spending Spree Is About More Than Capex - Barron'sSkip to Main ContentThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.# Big Tech's Spending Spree Is About Far More Than CapexBy [Adam Levine]ShareResize---ReprintsIn this article[AMZN][MSFT][GOOGL][META] [AAPL]Amaz ...

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Core Insights - Integrated software platforms are increasingly vital for AI-enabled modernization of hybrid, multicloud enterprise IT environments, as per ISG's research [1][2] - Platform consolidation has shifted from being an efficiency measure to a structural necessity for enterprises [1] - Enterprises are replacing fragmented toolchains with platforms that integrate AI-assisted execution and robust governance [1] Group 1: Platform Evaluation and Rankings - The 2026 ISG Buyers Guides™ evaluated 97 software providers, focusing on integration, delivery speed, automation, and governance [1] - Microsoft emerged as the top Overall Leader in the Application Platforms category, followed by ServiceNow and Salesforce, all rated Exemplary [1][2] - In the AI-Driven Development Platforms category, Microsoft also led, with Appian and Pegasystems following, all rated Exemplary [2] Group 2: AI Integration in Platforms - AI functionality is now a core component across all platform categories, enhancing efficiency and visibility in application delivery [1] - Development platforms are incorporating AI for code generation, testing, documentation, and performance tuning [1] - Organizations with mature integration practices are better positioned to adopt unified, AI-enabled platforms [1] Group 3: Intelligent Automation Platforms - ISG evaluated 37 providers in the Intelligent Automation Platforms category, with Appian, Microsoft, and Automation Anywhere leading in Process Intelligence Platforms [2] - In Intelligent Document Processing Platforms, Appian ranked first, followed by Microsoft and ServiceNow, all rated Exemplary [2] - Microsoft also led in Automation and Orchestration Platforms, with Appian and Automation Anywhere following closely [2]

Core Viewpoint - Investors are increasingly optimistic about artificial intelligence (AI) and its potential to positively impact financial results, leading to significant investments in the sector over the past three years [1] Group 1: Investment Opportunities - Despite some stocks experiencing price surges, there are still investment opportunities available for those with smaller amounts to invest, such as under $500 for certain AI leaders [2] - Microsoft is highlighted as a strong buy opportunity following a recent sell-off after its earnings report, attributed to rising capital expenditures related to AI data center construction [3] Group 2: Financial Performance - Microsoft reported a capital expenditure of $37.5 billion last quarter, exceeding analyst expectations, which contributed to the stock's sell-off [3] - The Azure cloud computing segment achieved a 39% growth, aligning with expectations, although investors anticipated higher revenue growth alongside increased capex [4] - Microsoft's remaining performance obligations rose to $625 billion, a 110% increase year over year, with a significant portion attributed to a new deal with OpenAI [5] Group 3: Risks and Management Insights - The increased capital expenditures are expected to impact profit margins due to rising depreciation expenses, with management indicating that two-thirds of spending is on short-lived assets [4] - OpenAI represents 45% of Microsoft's backlog, introducing customer-concentration risk, but even without this deal, Microsoft has substantial growth potential [5] - The software business remains robust, with the Productivity and Business Processes segment growing 14% year over year on a constant-currency basis, despite fears of AI displacing enterprise software applications [6] Group 4: Cash Flow and Funding - The combination of high-margin software business and increasing cloud billings generates significant cash flow, which supports funding for AI data center projects, with free cash flow reported at $5.9 billion [7]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Cloud Capital Expenditure (Capex)** trends among major U.S. hyperscalers, including **Amazon (AMZN)**, **Google (GOOGL)**, **Meta**, and **Microsoft (MSFT)**, indicating a significant increase in spending for 2026. Core Insights - **Aggregate Capex Growth**: U.S. hyperscalers' aggregate capex reached **$127 billion** in the December quarter, reflecting a **12% quarter-over-quarter** and **60% year-over-year** increase. The total capex is projected to reach approximately **$645 billion** in 2026, representing a growth of **56%** or an increase of **$230 billion** compared to 2025 [1][3][4]. - **Amazon (AMZN)**: - Capex for the December quarter rose to **$39.5 billion**, marking a **13% quarter-over-quarter** and **42% year-over-year** increase. - Full-year capex guidance for 2026 is set at about **$200 billion**, indicating a **52% year-over-year** growth, or an increase of **$68 billion** compared to 2025 [3][4]. - **Google (GOOGL)**: - December quarter capex increased to **$28 billion**, up **16% quarter-over-quarter** and **95% year-over-year**. - Full-year capex guidance for 2026 is between **$175 billion and $185 billion**, suggesting a **97% year-over-year** growth, or an increase of **$89 billion** compared to 2025 [3][4]. - **Meta**: - December quarter capex reached **$22 billion**, reflecting a **14% quarter-over-quarter** and **49% year-over-year** increase. - The 2026 capex outlook is between **$115 billion and $135 billion**, implying a **75% year-over-year** growth, or an increase of **$55 billion** compared to 2025 [3][4]. - **Microsoft (MSFT)**: - December quarter capex was **$38 billion**, with a **7% quarter-over-quarter** and **66% year-over-year** increase. - The company expects a **65% year-over-year** growth in capex for FY26, with a dollar increase of **$14 billion** [3][4]. Implications for Related Companies - The robust capex growth among these hyperscalers is seen as a positive indicator for companies involved in AI infrastructure spending, particularly **Jabil**, **Fabrinet**, **Amphenol**, **Arista**, **Celestica**, **Ciena**, **Coherent**, **Flex**, and **Lumentum** [1][3]. Additional Considerations - The conference highlighted potential supply constraints that could affect Google’s ability to deploy its planned capex, indicating a cautious outlook despite strong growth projections [3][4]. - The overall capex trends suggest a strong tailwind for the technology and networking sectors, driven by increased investments in data centers, servers, and networking infrastructure [1][3]. This summary encapsulates the key points discussed in the conference call, focusing on the significant growth in capex among major tech companies and its implications for the industry.

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the US Internet and Software industry, specifically focusing on the cloud services sector, highlighting the performance of major cloud providers in Q4 2025. Core Insights and Arguments - **Overall Industry Growth**: The cloud industry experienced a growth acceleration of approximately 5 percentage points to +34.7% year-over-year (YoY), driven by increases at AWS, GCP, and OCI [1] - **Individual Provider Performance**: - **Microsoft Azure**: Growth decelerated by 1 percentage point to +38% YoY constant currency (CC), impacted by capacity constraints and prioritization of Copilot and R&D [2] - **Amazon AWS**: Growth accelerated to +24% YoY CC, up from 20% in Q3, with significant revenue contributions from Trainium and Graviton products [2] - **Google Cloud**: Growth surged to +48% YoY, a notable increase from +34% in Q3, with 75% of clients utilizing vertically optimized AI products [2] - **Oracle Cloud Infrastructure (OCI)**: Growth accelerated by 12 percentage points to +66% YoY CC [1] Capital Expenditure (Capex) Insights - **Capex Growth**: Total capex for the cloud sector increased by over $11 billion quarter-over-quarter (QoQ), exceeding expectations. Specific capex figures include: - Microsoft: $35.1 billion in Q4, with expectations of a QoQ decline in F3Q but higher YoY growth for FY26 [3] - AWS: Approximately $27 billion in Q4, representing a +52% YoY increase [3] - Google Cloud: Approximately $14 billion in Q4, reflecting a +95% YoY increase [3] Booking and Revenue Backlog - **Bookings Growth**: Microsoft reported a remarkable 230% YoY growth in commercial bookings for 2QFY'26, driven by a $250 billion commitment from OpenAI [4] - **Revenue Backlogs**: - AWS backlog grew to $244 billion, a +38% YoY increase, bolstered by core AWS and AI demand [4] - Google Cloud backlog reached $240 billion, increasing by $147 billion YoY, attributed to rising AI demand and partnerships [4] Profitability Metrics - **Gross Margin and Operating Margin**: - Microsoft’s cloud gross margin was 67%, slightly better than guidance but down 3 percentage points YoY due to AI scaling [5] - AWS operating margin was 35%, exceeding expectations and higher than the previous quarter [5] - Google Cloud's operating margin improved significantly by 1,260 basis points YoY to 30.1% [5] Additional Noteworthy Points - The significant demand for AI infrastructure and solutions is a key driver of revenue growth across all major cloud providers, indicating a strong market trend towards AI integration [2] - The competitive landscape shows AWS maintaining a market share of 44%, with Azure at 30%, Google Cloud at 22%, and OCI at 5% [1] This summary encapsulates the essential insights from the conference call, providing a comprehensive overview of the current state and future outlook of the cloud services industry.

Price Objective Change AI capex CY26/27 outlook now up +56%/+16% YoY As we previewed (report), demand for data center/AI semis remains strong. Post-Q4 earnings, our capex tracker (which includes finance/capital leases) indicates Q4 global hyperscale capex at $148bn, up +14% QoQ or +66% YoY, versus prior expectation of $141bn. For CY26/27, capex now points to $748bn/$869bn or +56%/+16% YoY, also well above vs. +36%/+15% two weeks ago. Importantly, much of these CY26 planned capex/capacity have already been c ...

作者 | 第一财经 钱小岩 时隔两年半后再次访华的盖茨，对中国和世界又有了新的认识。 时隔两年半后，盖茨基金会主席比尔·盖茨再次回到中国。 盖茨此次行程首先抵达中国海南，参观、了解中国在农业领域的创新进展，随后抵达上海，关注于传染 病防控和母婴健康，上述三大领域都是盖茨基金会（以下简称"基金会"）关注的重点。2月11日傍晚， 盖茨还意外在上海张江现身，出席一场名为"行动创造希望"的活动。 在行程间隙，盖茨接受了第一财经记者的专访。在专访中，盖茨就对华合作、人工智能潜力乃至围绕其 个人声誉的争议，都进行了坦诚和系统的回应。这是盖茨在2023年6月到访北京后的首次访华。在过去 30年中，盖茨到访中国20多次。 始终看好中国创新 "中国在过去三代人的时间里，积累了大量的农业发展和教育改善的经验，其实可以问问你们的祖父 母，在（中国）取得这些成功前，是什么样子的"，在专访伊始，盖茨就以此称赞中国在短期内实现现 代化的成绩。 盖茨对第一财经表示，中国正在大幅提升在农业研究方面的投入，对于在海南的参观，他对无融合生殖 杂交水稻印象深刻，"取得了难以置信的成果"。 2019年，美国科学家和中国农科院中国水稻研究所水稻生物学 ...

时隔两年半后再次访华的盖茨，对中国和世界又有了新的认识。 时隔两年半后，盖茨基金会主席比尔·盖茨再次回到中国。 他还表示，基金会在北京联合创办了全球健康药物研发中心，也对上海创办的全球健康创新研究院提供 了赠款支持。作为微软的创始人，盖茨还透露他在10日下午还参观了微软亚洲研究院在上海的实验室。 盖茨表示，上述机构都在进行着卓越的研究工作。 盖茨此次行程首先抵达中国海南，参观、了解中国在农业领域的创新进展，随后抵达上海，关注于传染 病防控和母婴健康，上述三大领域都是盖茨基金会（以下简称"基金会"）关注的重点。2月11日傍晚， 盖茨还意外在上海张江现身，出席一场名为"行动创造希望"的活动。 在行程间隙，盖茨接受了第一财经记者的专访。在专访中，盖茨就对华合作、人工智能潜力乃至围绕其 个人声誉的争议，都进行了坦诚和系统的回应。这是盖茨在2023年6月到访北京后的首次访华。在过去 30年中，盖茨到访中国20多次。 始终看好中国创新 "中国在过去三代人的时间里，积累了大量的农业发展和教育改善的经验，其实可以问问你们的祖父 母，在（中国）取得这些成功前，是什么样子的"，在专访伊始，盖茨就以此称赞中国在短期内实现现 代化的 ...