New Deals Show AI Compute Spend Keeps Growing

AI and Technology Investment - The industry views AI as a significant productivity driver, with companies well-positioned to capture its potential and serve as platforms for economic growth [2] - The industry anticipates new AI use cases beyond chatbots, envisioning thousands of agents per company making decisions and unlocking labor potential [3] - The industry highlights the risk of under-investing in AI, emphasizing the need to keep pace with customer demand for compute capacity [9][10] - The industry believes that companies finding success in AI are seeing tremendous promise, encouraging further investment and expansion [13] Company Performance and Strategy - The industry acknowledges Amazon's strong earnings report and momentum, recognizing its potential to leverage AI in e-commerce and as an infrastructure provider [5] - The industry views Meta's capital expenditure as a long-term investment, anticipating returns despite short-term market digestion of increased CapEx and depreciation [7][8] - Microsoft's collaboration with neo cloud providers is seen as a flexible and nimble approach to expanding data center capacity and meeting demand [11][12] - The industry suggests investing in areas with scarcity and where performance depends on critical components like memory, highlighting the potential for companies like Micron to compound value over time [14][15] Financial Considerations and Risks - The industry acknowledges that valuations are elevated and companies need to sustain growth [20] - The industry notes that debt financing by companies like Alphabet is novel but reasonable given their strong cash generation and the long-lived nature of infrastructure assets [16][17] - The industry recognizes potential macro headwinds, including government shutdowns, but views them as temporary [19][20]