Good morning. And you thought the dollar figures being tossed around by the big banks this quarter were impressive? Prepare to be blown away by the budgets of Big Tech. Alphabet, Amazon, Meta and Microsoft all reported earnings yesterday, collectively estimating they will invest up to $665 billion in AI this year, almost 75% more than the $381 billion they spent in 2025. Some takeaways:
Spending is still surging. Banks profited nicely this quarter from investors trading like frenzied night-clubbers wondering if the party’s about to end. Now it’s the tech bros that are flashing Benjamins. (Fun fact: it would take a 413-mile stack of $100 bills to fund that $665-billion capital expenditure budget—according to my agent.) And the projected return on that investment? Good question. My colleague Shawn Tully points out that the expensive hardware fueling AI goes obsolete at lightning speed. OpenAI CFO Sarah Friar reportedly wants more discipline over spending at her company, which is careening towards a trillion-dollar valuation with nary a penny of profit in sight.
Cloud is king. Amazon traded higher yesterday, thanks to solid cloud demand. You know what else a strong public cloud business does? It gives you a way to resell excess computing capacity if, say, AI demand softens. That may be one reason why Meta stock fell yesterday. (It signed a $10 billion cloud deal with Google last year, and reported that “internet disruptions in Iran” curbed growth.) Alphabet’s profits were up by 81%, in part due to the fastest rate of cloud revenue growth since 2020. At Microsoft, Azure cloud growth was 40%.
Hope springs eternal. Or maybe there will be blood. Am I mixing my metaphors? Proof of a human in the loop. The volume of spending and revenue from these folks is staggering. So, too, could be the potential. Investors largely shrugged, perhaps because they’ve already invested a lot of their capital and their hopes in these folks. Oh, and there was a Fed meeting yesterday, not to mention higher oil prices, and other signs that AI alone is not the magic elixir to growth.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
Top leadership news
Starbucks is winning again
Starbucks credited more staffing in stores and enhanced employee benefits for quarterly sales growth that blew past Wall Street’s expectations. Starbucks COO Mike Grams told Fortune: “It really comes from the coffee houses and the partners who empower them, which has been a focal point of this turnaround all along.”
Defying Trump one last time
The Federal Reserve held interest rates steady in the range of 3.5% to 3.75%, defying President Trump’s demand to lower them in what was likely Chairman Jerome Powell’s final policy decision. Kevin Warsh, Trump’s nominee to replace Powell, is expected to take over in a matter of weeks. Powell will stay on the Board of Governors.
Nvidia CEO’s jobs prediction
Jensen Huang, CEO of Nvidia, pointed to one career path that he says will be especially critical as AI continues to “shape every job:” Engineering. Huang also answered several questions from Fortune about how AI will expand the scope of human work and the advice he has for young workers.
The markets
S&P 500 futures are down 0.06%. The last session closed down 0.04%. The STOXX Europe 600 was down 0.13% in early trading. The U.K.’s FTSE 100 was up 0.68% in early trading. Japan’s Nikkei 225 was down 1.06%. China’s CSI 300 was down 0.06%. Hong Kong’s Hang Seng was down 1.28%. South Korea’s KOSPI was down 1.38%. India’s NIFTY 50 is down 0.63%. Bitcoin was down at $76K.
Around the watercooler
The frontrunner in the longevity revolution was born during the Civil War by Diane Brady
FedEx and UPS are pledging to give their tariff refunds back to consumers, and the sum will likely top $5 billion by Sasha Rogelberg
The uncomfortable truth about AI and the American worker by Nick Lichtenberg
Robinhood CEO says a ‘tokenization supercycle’ is underway by Jeff John Roberts
Emma Grede, who helped found the $5 billion Skims empire, rejects ‘celebrity CEO’ label: ‘I’m a CEO who’s done so well you know my name’ by Cheyann Harris
Meta quietly rolls out stablecoin payments four years after demise of controversial Libra project by Jack Kubinec and Ben Weiss
CEO Daily is curated and edited by Andrew Wyrich, Jason Ma, Claire Zillman, and Lee Clifford.
