Hello,

 

We recently spoke at our May Investment Conference about the major current capital expenditure (capex) spend from tech giants such as Amazon, Alphabet and Microsoft. This topic has gained wider attention in recent weeks as Q1 earnings reports reveal that the three largest cloud computing companies in the world collectively spent $40bn in Q1 of 2024 on artificial intelligence capex. The vast majority of the spend has been on datacentres as tech companies scramble to meet the increased workload of generative AI projects. Capex forecasts show that spending plans are still increasing, despite heavy cost cutting measures at many of these companies in 2023.

 

Q1 earnings also highlighted the major revenue gains these companies have seen from January to March. All three of these companies reported revenue growth rates in Q1 which were higher than anticipated. Microsoft beat expectations on both the top and bottom line with $61.85 billion in revenue in Q1, whilst Alphabet easily beat Q1 revenue and EPS estimates. For Amazon, revenue increased 13% compared with Q1 of 2023. The high levels of cash at these companies has seen investors identify secular trends in the infrastructure that surrounds AI development. Areas such as renewable energy, sustainable building materials and construction have already seen investment as a result.

 

As always, if you wish to discuss anything in further detail, please do get in touch.