Twitter was extra flaky today (half these Tweets took minutes to appear) and threading messed up (probably my fault), so reprising here:
The Information ventures into the single most exciting technology topic today: Cloud CAPEX /1
But the headline is odd: “AI Push Drives Up Capex for Meta, Alphabet and Microsoft”. Despite putting Alphabet into the headline, they miss the biggest story which is Alphabet’s (who are we kidding, it is Google) plummeting CAPEX. /2
The story acknowledges: “Alphabet’s capex dropped 36% to $6.3 billion in the quarter”. But there is no sign whatsoever of Google spending on AI or any other infrastructure. /3
You have to go back to 2012 for a lower CAPEX as % of revenue spend by Google. /4
The Information leaned into Google’s guidance: “…but Alphabet Chief Financial Officer Ruth Porat told analysts last week that the company would boost capex in the second quarter and expected to finish 2023 with a “modestly higher” capex bill than in 2022.” /5
But Google CFO also promised a “meaningful increase in CapEx” for 2022 that didn’t materialize. Google historically has been on a four year CAPEX cycle and the replacement year was 2022, but it didn’t happen. /6
Google is skimping on CAPEX – why? Just to make their financial numbers or is something else going on? Assuming Google gets out of Safety First mode wrt AI, where is the infrastructure to run their AI on? /7
More detail: