Cloud giants pour nearly $600B into capex as AI demand surges

AI has turbocharged an already expanding cloud services market as organizations pour billions into online platforms offering the compute needed to train and run models, swelling the coffers of the established giants. Their latest results show revenue surging alongside capital spending as Amazon, Google, and Microsoft race to add …

[Korev]

Please could I have some money for my Tulip farm in the South Sea?

[David 132]

Only if you'll give me an NFT of it in return!!!

Seriously, though, "Cloud giants pour nearly $600B into capex" - what is that, like, 3x DDR5 DIMM kits or one-half of a GeForce graphics card?

[EricM]

The fuse has been lit ...

OpenAI was already forced to lower token prices for some models to stop customers from switching to cheaper Chinese models.

This way OpenAI will not become profitable at all and will most probably not be able to fulfill the long-term commitments it made to the data center operators.

Anthropic will be under the same pressure.

So the current, insane level of CAPEX spending by the likes of Microsoft and Oracle might not be sustainable.

[David 132]

Re: The fuse has been lit ...

So the current, insane level of CAPEX spending by the likes of Microsoft and Oracle might not be sustainable.

God willing.

(Or for a secular equivalent: "one can only hope"...)

[alain williams]

So when the AI bubble bursts ...

will RAM prices drop to something like they were ?

[jglathe]

Re: So when the AI bubble bursts ...

hmm... or below-ish. There will be a lot of non-revenue generating kit out there. And gigantic pipelines full of in-production high-end chips. Someone needs to make use of them, and since the Slop has poisoned the pond... others will. We'll see. Asking myself if just optimizing the hardware I already have may be the way for the next years anyway.

[Like a badger]

Re: So when the AI bubble bursts ...

Although much of the stuff in the pipeline is designed for at scale server farms. If you want to run Doom 3D on a six foot tall 42U rack then you may well be in luck. For gamers hoping to buy a 64 GB DDR5 RAM kit maybe less so for a couple of years after the bubble pops. And don't forget, that bubble can keep on inflating as long as dodgy corporate finance can keep adding the "investments" to unwitting insurance or pension fund balance sheets, so it may still have a couple of years to run (or just a couple of days, who knows).

[Yet Another Anonymous coward]

Re: So when the AI bubble bursts ...

Or, the reason ram is so expensive isn't because the AI is using it, but because they bought all the fab's capacity for custom AI chippery

So if the AI went pop, a lot of those fab runs might not get paid for. So some of those fabs, and other bits of the supply chain, might experience a significant financial event.

So if some of the capacity went bust, ram prices might actually increase

[spireite]

Doom rack....

You will however be abl;e to get a large screen in there, a powerful minipc, leubopard/mouse/joystick and stull be able to stand in it...

A doom capsule if you will.

[retiredFool]

Re: So when the AI bubble bursts ...

I think you sort of nailed it. Except the current trump gov and US AI co's are positioning AI buildout as existential to the US security against those bad commies in China. Almost like a rerun of the space race with Russia in the 60's. So the gov will spend to keep AI going. Not good. Especially since their is need for resources elsewhere. Just saw a story about the cutbacks in SNAP (food stamps, or food assistance for non-US people). AZ has had 1/2 of its recipients tossed out of the system. And no they did need the assistance, it wasn't the grift that trump is. Food bank usage has gone up in response with banks now running out of food.

I think I recall an old song from the 60's or 70's talking about people in the US starving in the richest country in the world. I guess we have made america great again eh donald?

[Yet Another Anonymous coward]

Re: So when the AI bubble bursts ...

I don't think you understand modern economics. America has an obesity crisis, so by simply starving the poorest 50% of the population we can half the average BMI.

It's like how building an AI datacenter in Mississippi makes its per capita GDP higher than Europeans

[DS999]

Re: So when the AI bubble bursts ...

No, because everyone was forced to sign five year deals to get memory, and those set a price floor well above what the prices were before this all happened. Prices will never be back to where they were last summer when I paid $90 for 2x24 GB DDR5 DIMMs in May 2025.

[Boris the Cockroach]

And theres my boss

on his hands and knees to the bank this week trying to prise a 125K loan over 3 years out of the bastards.

Should have told them its for a couple of AI servers instead of a machining center

[spireite]

Ouch, that'll leave a mark!

When it eventually goes tits-up, there will be a lot of corporations and investors in it getting substantial monetary shocks.

Some will not recover from it....

Now, where's my popcorn?

[retiredFool]

Re: Ouch, that'll leave a mark!

There will be winners and losers. There was that "new young" Leopold guy who was playing options that was an ex-AI researcher. Tits up. Loser. Then there was citadel guy (old guy) who recognized the situation and scooped up the distressed assets. Winner. Sometimes I guess old school and human intelligence beats AI.

[Cubbie Roo]

The words 'terrible capital misallocation' springs to mind, all predicated on the bet that OpenAI/Anthropic will have insane demand at a stratospheric price point, both of which need to happen in -like- 6-12 months before all the VC cash is set on fire. Never. Gonna, Happen.

[Brl4n]

Santa Claus also real

Nope

In related, actual news, in case you missed it, read this:

https://open.substack.com/pub/groundbreakerre/p/the-second-derivative-why-no-one