US Big Tech Raises AI Capex to as Much as $720 Billion, Boosting Samsung and SK Hynix

Amazon, Microsoft and peers target up to $720 billion

"AI demand is outstripping supply"

Amazon.com Inc., Alphabet Inc., Microsoft Corp. and Meta Platforms Inc. all posted strong first-quarter revenue growth from a year earlier, driven by artificial intelligence demand that continues to outpace supply. The companies now plan to increase spending on AI infrastructure this year, a move that stands to benefit South Korean suppliers including Samsung Electronics Co. and SK Hynix Inc.

The four companies, which reported earnings on April 29, all topped market estimates for first-quarter revenue. Amazon's sales rose 17% from a year earlier to $181.5 billion. Alphabet's revenue increased 22% to $109.9 billion. Microsoft's climbed 18% to $82.9 billion, while Meta's jumped 33% to $56.3 billion.

Cloud businesses tied directly to data centers led the results. Google Cloud revenue surged 63% from a year earlier to $20.02 billion, while Amazon Web Services sales rose 28% to $37.6 billion. Microsoft's cloud business also grew 40% from a year earlier.

Executives at the companies delivered the same message on capacity constraints. Alphabet Chief Executive Officer Sundar Pichai said Google Cloud revenue would have been higher if the company had been able to meet demand. Google Cloud's remaining performance obligations nearly doubled in three months, rising to $460 billion in the first quarter from $240 billion in the fourth quarter of last year. At Microsoft, Chief Financial Officer Amy Hood said customer demand is exceeding available computing capacity.

That is prompting the companies to step up investment in AI infrastructure. Alphabet said it would raise this year's capital expenditure plan to $180 billion to $190 billion, from the $175 billion to $185 billion range it gave in the fourth quarter of last year. Meta also increased its planned spending to $125 billion to $145 billion from $115 billion to $135 billion. Microsoft said it will spend $190 billion this year, up 61% from a year earlier.

Higher spending by the US technology giants is also positive for South Korean chipmakers. High-bandwidth memory, or HBM, produced by South Korean companies is an essential component in AI data centers built around Nvidia Corp. graphics processing units and application-specific integrated circuits, or ASICs.

Kim In-yeob, Silicon Valley correspondent, Hankyung.com, inside@hankyung.com