Alphabet and Microsoft ramp up AI spend – Investors Chronicle
Microsoft (US:MSFT) and Alphabet (US:GOOGL) have increased capital expenditure as they look to expand their artificial intelligence (AI) capabilities. Job cuts and operational efficiency measures have improved profitability, which has enabled a ramp-up in spending on the infrastructure needed to train AI models.
The largest technology companies are racing to get their hands on advanced parallel computing chips. Microsoft’s results for the June quarter showed it spent $8.9bn (£6.9bn) on property and equipment, 7.2 per cent ahead of FactSet analyst expectations. The company is guiding for sequential increases in capex spending over the next four quarters.
Limited chip supply has sparked a race between the largest tech companies. Alphabet increased its capex to $6.89bn in the last quarter, up from $6.29bn in the previous quarter. Chief financial officer Ruth Porat said the largest component of capex was for severs which included “a meaningful increase” in AI investments. This included Google’s own parallel computing chips, known as TPUs, and GPUs (graphics processing units) designed by other suppliers.
