Big Tech Q2 Earnings Defend AI CapEx: Demand Strong, Cloud Margins Expand
RihardJarc · x · 2026-08-04
An analysis of the latest Q2 earnings from Amazon, Microsoft, Google, and Meta argues that the thesis of poor returns on AI capital expenditures is dead. Instead of cutting CapEx, all four tech giants outlined a coordinated strategy to de-risk their massive investments: committing early to long-lived assets like land, data centers, and power, while adopting a "just-in-time" approach for chip procurement based on visible demand.
The earnings reveal that while AI workloads remain a smaller percentage of total cloud revenue (e.g., AWS's AI run rate is $25B vs. $169B total), they are pulling traditional workloads up with them. Furthermore, cloud margins across AWS, Azure, and Google Cloud continued to expand, indicating that AI workloads are generating higher margins than non-AI workloads.
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