All the chips are on the table
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.