Big Tech’s $665 Billion AI Bet: Will It Succeed?

• In today’s CEO Daily: Diane Brady breaks down the data from yesterday’s tech earnings windfall.
• The big leadership story: Starbucks’ recovery efforts are beginning to gain traction.
• The markets: Markets are down as oil reaches a four-year peak.
• Plus: All the latest news and office chatter from .

(SeaPRwire) –   Good morning. You thought the dollar amounts big banks were throwing around this quarter were noteworthy? Get ready to be astonished by Big Tech’s spending plans. Alphabet, Amazon, Meta, and Microsoft all released their earnings reports yesterday, together projecting they’ll pour up to $665 billion into AI this year—nearly 75% more than the $381 billion they spent in 2025. Here are some key insights:

Spending is still surging. This quarter, banks raked in solid profits from investors trading like frantic clubgoers unsure if the party’s about to wrap up. Now it’s the tech guys who are flaunting their cash. (Fun tidbit: Funding that $665-billion capital expenditure budget would require a 413-mile stack of $100 bills—per my agent.) What about the expected return on that investment? Great question. My colleague Shawn Tully notes that the costly hardware powering AI becomes outdated extremely quickly. OpenAI’s CFO Sarah Friar is said to want tighter control over spending at her firm, which is hurtling toward a trillion-dollar valuation despite not having turned a single profit yet.

Cloud is king. Amazon’s stock rose yesterday, driven by robust cloud demand. Another benefit of a strong public cloud operation? It lets you resell unused computing power if AI demand slows down, for example. That could be one factor behind Meta’s stock drop yesterday. (Last year, it inked a $10 billion cloud agreement with Google, and it reported that “internet disruptions in Iran” hampered growth.) Alphabet’s profits jumped 81%, partly because of its fastest cloud revenue growth rate since 2020. Microsoft’s Azure cloud saw 40% growth.

Hope springs eternal. Or maybe there’s trouble ahead. Am I blending metaphors here? Evidence that a human is involved. The scale of spending and revenue from these companies is mind-blowing. Their potential could be just as immense. Investors mostly didn’t react strongly, possibly because they’ve already put a lot of their money and hopes into these firms. Also, there was a Fed meeting yesterday, plus rising oil prices and other indicators that AI alone isn’t the magic solution for growth.

Reach CEO Daily through Diane Brady at diane.brady@.com