Big Tech earnings show a sector going industrial

Core Insights - The current phase of growth in the tech industry is characterized by significant capital expenditures (capex) driven by the AI arms race, with major players like Microsoft, Amazon, Alphabet, and Meta heavily investing in infrastructure to support AI and cloud services [1][5][27] - The competition among Big Tech firms has shifted from abstract growth metrics to tangible infrastructure investments, with a focus on power, capacity, and physical assets [3][7][20] Company Summaries - Alphabet: Increased its projected 2025 capex to $91–93 billion, focusing on servers and networking gear, with analysts noting that its ad revenue growth supports this infrastructure investment [2][13] - Microsoft: Reported record revenue of $77.7 billion for the quarter, up 18%, with a backlog of $392 billion, showcasing its operational efficiency and strong demand for Azure services, which grew approximately 40% year over year [12][18][17] - Amazon: Achieved a 20% growth in AWS revenue, reaching $33 billion, and emphasized its strategy of acquiring energy contracts to support its infrastructure needs, which contributed to a 10% increase in its stock price post-earnings [6][19][14] - Meta: Announced plans to spend $70–72 billion in 2025, despite lacking a rentable cloud, indicating a commitment to infrastructure investment to catch up with competitors [4][27] - Apple: Continued to show strong performance in its services segment, with revenue climbing 15% to $28.8 billion, maintaining high margins even as hardware sales softened [25][27] Industry Trends - The cloud and AI sectors are converging, with companies now competing for control over infrastructure rather than just software capabilities, marking a shift in how dominance is measured in the tech industry [7][20] - The ad economy remains a crucial funding source for infrastructure investments, with significant revenue growth reported by Meta and Alphabet, indicating that traditional revenue streams are still vital for supporting new capital expenditures [22][21] - The competitive landscape among Microsoft, Amazon, and Alphabet is intensifying, with each company demonstrating strong growth and infrastructure commitments, leading to a more complex and competitive environment [16][19][27]