Google, Microsoft, Meta earnings: Where does AI demand stand?

Meta (META), Microsoft (MSFT), and Alphabet (GOOG, GOOGL) reported earnings results on Wednesday, to be followed by Amazon (AMZN) and Apple (AAPL) on Thursday after the closing bell.

Yahoo Finance Executive Editor Brian Sozzi and Yahoo Finance Technology Editor Dan Howley join Morning Brief host Julie Hyman to discuss Microsoft's earnings call, artificial intelligence (AI) demand and capital expenditures (CapEx) spending, and more.

To watch more expert insights and analysis on the latest market action, check out more Morning Brief.

Video Transcript

00:00 Julie

just to emphasize what we're talking about, I actually want to play for people what the CFO of the company, Amy Hood said on the call because it it really was pretty remarkable. So listen to what she said.

00:32 Amy Hood

We are, and I said this now, um, we've been short, um, now for many quarters.

00:44 Amy Hood

I thought we were going to catch up. We are not. Demand is increasing. It is not increasing in just one place. It is increasing across many places.

01:00 Julie

So, this is remarkable to me, Brian Sozzi. They see this as non-negotiable. They do not have the capacity to meet the demand they are seeing. It's a signal. And so, they just got to keep spending and spending and spending.

01:18 Brian Sozzi

Before I dig in on the I I I got to read this quote from Satya Nadella right off the earnings release yesterday because I read it, I'm like, Satya, I mean, you're the man, dude, but I don't even know what the hell you're talking about. He said, quote, our planet scale cloud and AI factory together with co-pilots across high value domains is driving broad diffusion and real world impact. Like, I don't even know what that means, man. All I know is that I hopped on I hopped on that earnings call and I think Satya and Amy Hood silenced any concerns out there about the AI trade. We heard her from earlier in with NVIDIA GTC in DC. Uh, strong demand signals, Jensen in his black leather jacket got on a stage, said, hey, we see $500 billion in uh demand for our next generation chips. Check done. That is good. Microsoft says, guys, we're going to double our data center infrastructure over the next several years. And they're going to build giant factories across this country. And I don't think Microsoft would be spending billions of dollars over the next four, five, six decade, whatever number of years, if they didn't see the demand there to support that. These are very smart people that know what they're doing and they get paid a lot of money to do it.

02:21 Julie

Dan, get in there.

02:23 Dan

Yeah, just just one thing I want to add is there was a question about what happens, you know, you have a lot of the small players, uh, coming in and and saying, look, we we we want to be a part of the Microsoft cloud that's adding to the capacity constraints. Someone asked on the call, what happens if they don't have anything? What happens if they never, uh, pay you or they can't pay you for those guarantees. And so the the response there was, you know, look, we're we're building out for the the uh uh requirements that we have for the the requests we have for uh AI, uh, and we're being careful about that buildout. So I, I think the the jux position between what Mark Zuckerberg was saying and what Satya Nadella was saying was, I mean, the chasm there is is extraordinary.

03:22 Julie

I mean, listen, there's plenty of private credit out there to to lend money to those companies to buy that capacity, right?

03:32 Brian Sozzi

I got to drop I got to drop that stat, this stat. I was very proud to to pull it up, so I need to tell say here, Julie. Microsoft, Google, or Alphabet, whatever you want to think of them today, Meta, $78 billion on CAPEX in the third quarter. That's up 89% year over year. That is an absolutely mind-blowing number. It also makes me giggle a lit because giggle a little bit because if, you know, 10 years ago we were having this conversation, nobody was looking at CAPEX numbers for technology except Wall Street analysts. But now this is the biggest market driver here, these numbers you're seeing on this.

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