The recent surge in cloud spending on Microsoft Azure, Amazon Web Services (AWS) and Google Cloud has caught the attention of Timothy Prickett Morgan of The next platformWhich led him to raise an intriguing question: How much of this seemingly impressive growth, he wonders, is actually due to investments in AI startups like OpenAI and Anthropic, funded by these same tech giants?
Recently, Microsoft has invested $13 billion in OpenAI, Amazon has committed $4 billion to Anthropic, and Google has also contributed $2.55 billion to Anthropic.
These substantial investments can not only drive innovation but, the technology expert warns, also inflate cloud revenues as money flows back into cloud spending on infrastructure provided by these companies.
Sugar daddy investments
This situation, with nearly $20 billion invested in OpenAI and Anthropic, much of which has likely been used to acquire cloud capacity to train and test generative AI models, creates a feedback loop. Investment in these AI startups translates into cloud spending, potentially making cloud providers’ revenue growth appear more substantial than it actually is.
As cloud service providers continue to see increased demand for GPU-accelerated systems, driven by the rise of AI, their operating income has been increasing. AWS, for example, saw its operating income increase 74 percent to $9.33 billion in the same quarter. But the sustainability of this growth remains uncertain, especially if a significant portion of it is fueled by these investment-driven cycles.
The additional $7.93 billion in core systems revenue from AWS, Microsoft and Google can be closely tied to their investments in AI, and the real test will be whether these growth rates can be sustained without relying on such investments to drive cloud spending.
Timothy Prickett Morgan asks: “How much of that [$7.93 billion] How much of that came from the nearly $20 billion these companies invested in OpenAI and Anthropic? How much came from the unknown number of AI startups these companies might also have stakes in, and who got those stakes only because the companies knew they had to spend most of that money on cloud capacity to train their models? It’s a big question, and we’d love to know the answer.
