- In today’s CEO Daily: Diane Brady crunches the numbers from yesterday’s tech earnings bonanza.
- The big leadership story: Starbucks’ turnaround is starting to take hold.
- The markets: Down as oil hits a four-year high.
- Plus: All the news and watercooler chat from Fortune.
Good morning. And you thought the dollar figures being tossed around by the big banks this quarter were impressive? Prepare to be blown away by the budgets of Big Tech. Alphabet, Amazon, Meta and Microsoft all reported earnings yesterday, collectively estimating they will invest up to $665 billion in AI this year, almost 75% more than the $381 billion they spent in 2025. Some takeaways:
Spending is still surging. Banks profited nicely this quarter from investors trading like frenzied night-clubbers wondering if the party’s about to end. Now it’s the tech bros that are flashing Benjamins. (Fun fact: it would take a 413-mile stack of $100 bills to fund that $665-billion capital expenditure budget—according to my agent.) And the projected return on that investment? Good question. My colleague Shawn Tully points out that the expensive hardware fueling AI goes obsolete at lightning speed. OpenAI CFO Sarah Friar reportedly wants more discipline over spending at her company, which is careening towards a trillion-dollar valuation with nary a penny of profit in sight.
Cloud is king. Amazon traded higher yesterday, thanks to solid cloud demand. You know what else a strong public cloud business does? It gives you a way to resell excess computing capacity if, say, AI demand softens. That may be one reason why Meta stock fell yesterday. (It signed a $10 billion cloud deal with Google last year, and reported that “internet disruptions in Iran” curbed growth.) Alphabet’s profits were up by 81%, in part due to the fastest rate of cloud revenue growth since 2020. At Microsoft, Azure cloud growth was 40%.
Hope springs eternal. Or maybe there will be blood. Am I mixing my metaphors? Proof of a human in the loop. The volume of spending and revenue from these folks is staggering. So, too, could be the potential. Investors largely shrugged, perhaps because they’ve already invested a lot of their capital and their hopes in these folks. Oh, and there was a Fed meeting yesterday, not to mention higher oil prices, and other signs that AI alone is not the magic elixir to growth. Contact CEO Daily via Diane Brady at [email protected]
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