00:00 Speaker A
Dan, um the spending really is the thing that seems to be grabbing all of the headlines.
00:05 Dan
Yeah, I mean, we might as well just, you know, call it quits right now cuz that’s it. I mean it’s it’s all about how much they’re raising capX. Uh specifically meta. They uh they raised their their bottom line for uh the capX, the the the bottom end for their top X, uh capX, excuse me, from 66 billion to 70 billion. so it’s between 70 and 72 billion. The high end was still 72, uh but obviously it’s that lower end number that people are kind of freaking out about.
00:32 Dan
That’s for uh uh you know, spending on CPUs, GPUs, data centers, all of that. Uh clearly investors not excited. I think last I saw uh in pre-market, they were off as much as 10%. Uh look at Microsoft, kind of the same deal. They’re going to continue to spend. But by the way, Meta, uh just in case investors weren’t wary uh or weary of the spending in 2025, they said they’re going to significantly increase it next year.
00:58 Dan
So, just, you know, buckle up for that. I don’t know how many data we can see around the country, but apparently a lot more. Uh Microsoft meanwhile, they’re also going to be raising their capX. Uh they didn’t give us firm numbers, uh but they did say that it’s going to be higher uh and they say that it’s going to be uh going to GPUs, CPUs, building out those data centers. Uh and you know, you you uh mentioned it earlier, C CFO Amy Hood saying, look, we’re we’re still capacity constrained and we think we’re still going to be capacity constrained through the end of the fiscal year.
01:25 Dan
This is they’re now in their second quarter of fiscal 2026. So they still have you know, a while to go before they feel as though they may no longer be capacity constrained. So they’re still spending. I think the good news there at least shows that they’re being judicious about their spending. Sure, they are pumping out, uh, you know, building out these data centers, but there’s a a a demand behind it, right? So that means that they’re trying to catch up to that.
01:49 Dan
And one of the big numbers uh that we talk about uh or or they talk about is uh performance guarantees uh that are still outstanding. Uh and so that’s basically, you know, uh contracts that have been signed but not paid for yet. uh uh things along those lines and they still have a large amount of that. I think it was 400 million in the in the prior quarter. Uh and then, you know, when you look at Google, on the flip side, things appear to be hunky-dory for them. I mean, they’re still going to be raising uh capX, still building out, uh but the results seem to be doing better uh than well, at least as far as investors go uh than the others just because of the Google Cloud platform performing so well.
02:22 Dan
And so, you know, it’s it’s this continued fear of okay, you keep pumping billions into this, where does this all go? And I think for Microsoft and Google, it’s pretty clear it’s going to their cloud. Microsoft, you know, they have the whole open AI deal. Um they no longer are the cloud provider of choice. That might benefit Microsoft because again, they’re being very judicious about their build out.
02:40 Dan
Um one of the questions that was raised on the Microsoft call in particular and the might uh and uh uh uh the Meta CEO, Mark Zuckerberg had kind of uh hinted at in his own call, was about what happens if you don’t make anything of this now. And it was kind of the answer from Zuckerberg at least was, look, we want to get the pain out of the way right away and then we’re not capacity constrained in the future. And hey, if people aren’t using AI at that point, then we’ll find something else to do with it, I guess.
03:04 Speaker A
Oh my gosh.
03:05 Dan
So, you know, and then with with uh Microsoft it was we have to build out. We just don’t have the capacity, but we’re going to take our time. And so, I think that that no longer being the sole cloud provider or even having the first right of refusal for open AI is a good thing for Microsoft in their head because they don’t want to be on the hook for all this capacity and this build out just in case.
