💸 Capex spend speeds up

Two knockout earnings reports from tech heavyweights Microsoft and Meta didn’t cause just their stocks to soar this morning — they lifted the entire AI complex.

These companies are blowing away analysts’ expectations in large part because of their AI capabilities. And if something is making you money, you’re willing to invest more into it. Especially if some recent tax tweaks are making that even easier to finance.

• Microsoft’s guidance of $30 billion in capex for the current quarter implies a run rate of $120 billion for fiscal 2026. Meta, meanwhile, hinted that business investment next year could approach the $100 billion mark.

• Zuckerberg? We know he’ll spend billions on just about anything. Nadella? Well, that’s a different story. Beyond the DeepSeek freak-out, perhaps the top source of worries about an AI capex slowdown this year centered on the cloud giant maybe having too many data centers.

The tree of AI spending is growing to the sky — and this tree’s branches are poised to grow even closer to the sun soon, as it doesn’t yet incorporate the recent guidance from these two hyperscalers. All that capex is the earnings of other major companies. And we’re seeing the effects of this continued commitment to spending billions upon billions rippling through the AI supply chain.

The Takeaway

The entire AI ecosystem stands to benefit from titans plowing this kind of money into this kind of business. Want extra access to Nvidia’s GPUs? You go to CoreWeave. Want more of your own chips? Hello, Nvidia and AMD. You want to house them? Super Micro Computer and Dell are ready to take your money. You want the physical infrastructure to support that data center? Enter GE Vernova, Arista Networks, and Vertiv Holdings. You need power to turn it all on? Constellation Energy and Vistra got you. 

Again, it needs to be said: all that capex is other companies’ earnings. This week wasn’t the last time we’re going to see these dollars on a quarterly report. Next time, they’ll just be in the revenue column. 

Go Deeper: Two revealing charts on the AI spending boom

Speaking of capex, Amazon continued the trend after the bell on Thursday, revealing in its earnings report that the company’s capital expenditures in the second quarter totaled $32.18 billion, up a whopping 83% from a year earlier and way above analysts’ estimates.

The company posted $167.7 billion in sales for Q2, growing 13% from the same quarter a year earlier and topping analysts’ expectations of $162.19 billion. A huge portion of the profits came from Amazon’s AWS cloud business, which saw revenue grow 17.5% year on year to surpass $30 billion for the first time, powered by huge demand for AI. The bulk of its business still came from North America, but that cloud power is growing and could overtake its international division, as this chart shows.

Meanwhile, Apple reported after the bell and its initial release had little to say about AI or capex, as it continues to play a game of AI catch-up with its Big Tech peers. But the iPhone maker had plenty of good news to share:

• 💵 Revenue of $94.04 billion, compared to expectations of $89.35 billion.

• 📱 iPhone revenue came in at $44.6 billion, versus the FactSet consensus of $40.1 billion.

• ☁️ Services brought in $27.4 billion, compared with expectations of $26.8 billion.

Regionally, China was a beat but America was a miss. You can’t win them all! 

Later on the earnings call, CEO Tim Cook did address the AI elephant in the room, saying, “We see AI as one of the most profound technologies of our lifetime… we are also significantly growing our investment.”

The Takeaway

Even though both companies hit it out of the park on results this quarter, only one of them rose in after-hours trading, and it’s probably not the one you think! Off the cuff, we’d say it’s because the other one lowered guidance and markets tend to be forward-looking beasts.

Read more about Amazon and Apple.

AI startups’ valuations are shooting sky-high

OpenAI’s valuation has doubled over the past six months to the size of Coca-Cola’s market cap. Now, Anthropic is reportedly closing in on a $170 billion valuation, just five months after being worth $61.5 billion. A new source of funding is also fueling this high-velocity trend.  

See AI startups’ valuations, ranked.

• eBay hit an all-time high as Wall Street cheers Q2 beat and tariff resilience

• Norwegian Cruise Line sailed higher after record revenue calmed investors’ fears of choppy demand 

• Roblox jumped after second-quarter bookings — the amount of money users spent on the platform — beat Wall Street estimates 

• Cigna shares dropped 10% despite the healthcare insurer beating Q2 estimates and showing solid cost control during the quarter

• AB InBev, parent company of Budweiser, Corona, and Stella Artois, has sold less beer for nine quarters in a row

• Eli Lilly’s blockbuster diabetes and weight-loss drug, Mounjaro, was just as effective at preventing heart attacks and strokes as its older diabetes and cardiovascular treatment

• LiveWire, Harley-Davidson’s electric bike brand, sold only 55 electric motorcycles last quarter

• Just after ethereum turned 10, ethereum treasuries surpassed $10 billion in their stockpiles