Amazon vs Alphabet: AI Capex Showdown

Amazon and Alphabet's cloud businesses are racing to monetize AI infrastructure investments, but each company is taking a different approach.

Alphabet raised its full-year capital expenditure (capex) guidance to $195 billion to $205 billion, up from $180 billion to $190 billion, and funded it by raising $70 billion in combined equity and debt. The company suspended its buyback program and increased long-term debt to $98.2 billion.

In contrast, Amazon is self-funding its AI capex through its own operating cash flow of $45.39B, which allowed the company to grow its cloud backlog to $496B. AWS revenue reached $42.2 billion, growing 36.7% year-over-year, with a 39% margin and operating income of $16.6 billion.

Google Cloud, on the other hand, grew faster but at a smaller base, reaching $24.8 billion in revenue, up 82%, with an operating income of $8.8 billion and a 35.6% margin. Alphabet's CFO Anat Ashkenazi warned that Google remains 'supply-constrained' and will rely on third-party capacity as a bridge.