Platformonomics TGIF is a weekly roll-up of links, comments on those links, and perhaps a little too much tugging on my favorite threads.
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Platformonomics is off the next two weeks (recovering from Clown Week and the Q1 CAPEX numbers). Look for our next missive May 24th.
News
Q1 Amazon CAPEX
Amazon is the last of the clouds to report for Q1: CAPEX of $15 billion, up 5%.
The Amazon numbers are not very insightful as they include both the retail business and AWS, and both have been churning post-pandemic.
AWS was 46% of Amazon’s total CAPEX in 2023 (they only break AWS out annually) and AWS CAPEX down for the first time ever last year.
The guidance was:
We anticipate our overall capital expenditures to meaningfully increase year-over-year in 2024, primarily driven by higher infrastructure CapEx to support growth in AWS, including generative AI.
On the — well, we’re talking about CapEx. Right now, in Q1, we had $14 billion of CapEx. We expect that to be the low quarter for the year.
Previous:
Follow the CAPEX: Cloud Table Stakes 2023 Retrospective, Follow the CAPEX: Triangulating NVIDIA, Amazon Desperately Seeks Compression Algorithm for Experience, Most Greatest AI Company in Entire Universe Makes Major Strategy Pivot, SEC Embraces Platformonomics ClownWatch™, Warns Amazon and IBM, The AWS Generative AI Soap Opera, The Amazon AI Inferiority Complex
Q1 CAPEX Summary Scorecard (Final)
A reminder: upwards of 80-90% of Google/Meta/Microsoft CAPEX goes to cloud infrastructure. The comparable Amazon number is likely under 50%.
Platformonomics ClownWatch™ at some point is going to have to look at Elon’s three inadequately funded AI efforts (Tesla, Twitter and xAI). Even combined they’re not in the game. Maybe that will motivate more Elon corporate governance shenanigans?
We Are All Now CAPEX Obsessives
This was the CAPEX quarter! Welcome everyone aboard the CAPEX train! I probably should sell merch.
We Are Not All Arithmetic Obsessives
While seemingly aboard the CAPEX train, the New York Times still has some arithmetic quality control issues. But they do aspire to be a tech company, so they have that going for them.
Some (New) CAPEX Obsessives Are Hallucinating Wildly
The importance of CAPEX has become common knowledge. There is no better indicator than the fact venture capitalists have started doing CAPEX thought leadership tweets and blog posts in the last week.
One must admire the ability to meld absolute certainty with getting the data (and conclusions) completely wrong (and bonus points for simultaneously being the author of “Winning with Data”).
Cloud Repatriation is Going Just Great: Q1 2024
The cloud repatriation narrative says companies are furiously moving workloads back to their own data centers from the cloud. Between the tailwinds of repatriation and generative AI, you’d think the biggest data center operators would be reporting blow out numbers. But they’re not.
Digital Realty Trust reported a revenue decline of 3% and tried to hide it with an anemic earnings day “partnership” announcement with noted CAPEX clown Oracle (you may want to be seated when you read this game-changing news):
As part of this collaboration, Oracle will deploy critical GPU-based infrastructure in a dedicated Digital Realty data center in Northern Virginia.
Fellow data center giant Equinix can’t even provide a date for reporting Q1 earnings after serious fraud allegations.
With Equinix on the floor in a fetal position, we are unable to update the Platformonomics Repatriation Index™. But if Equinix managed 10% growth for the quarter, the index would still be at an all-time-low (i.e. the lowest evidence of repatriation).
Data centers are not the slam dunk investment everyone thinks they are. There will be blood.
Previous:
Cloud Repatriation is Going Just Great: Continued Radio Silence, Cloud Repatriation is Going Just Great: Radio Silence from Equinix, Cloud Repatriation is Going Just Great: Equinix, New Cloud Repatriation Hypothesis, Cloud Repatriation Where Art Thou?, Cloud Repatriation: The Search Continues, Cloud Repatriation: Still Not a Thing, Platformonomics Repatriation Index™ – Q1 2023: Surf’s Up?, Private Equity in Action: Data Centers, Oracle Moves to Nashville, Should I Stay or Should I Go
Wrapping Oneself in the Flag: Seattle Times Edition
Just putting a marker down on this apparently serious proposal from the Seattle Times, a legacy provincial newspaper turned web site aggregator. Declaring themselves synonymous with democracy, they ask to be made a ward of state, which somehow will help a free press flourish. Note the lack of details about the legislation they are requesting.
I am giving them a chance to persuade me they don’t actually mean this, but if they do, I have thoughts. Many thoughts.
EU Announces Meta Struggle Sessions
The struggle sessions will continue until Europe has a tech industry (so don’t hold your breath).
Reminder: The European Union is an Advanced Persistent Threat
Feature Request: Podcast Players
Can we please have a new podcast category: “VCs Shamelessly Talking Their Books”?
Maybe also a category for “VCs Shamelessly Talking Their Books from the AI Sidelines”?
You could persuade me there is a lot of overlap between those two.
And, of course, provide an option to hide these categories.