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Nvidia has been the early winner of the AI boom; there is no doubt about that. The big question is, who will be next? The most likely answer is the guys that have been buying all those chips, namely the big tech companies. There are various theories about returns per GPU purchased but let's be honest, these businesses do very different things and calculating an IRR on the capital invested is too generic.
What I am looking for is a tangible positive difference coming through from these company's numbers. And so far, so good, during the latest earnings season. Meta and Google's advertising is more efficient and direct. Microsoft's Office tools are more useful with Copilot as an added feature. Amazon is managing its inventory and search results better for its online stores.
Of these 4 companies Google has increased their capex spend by 91% over the last year. Microsoft has increased their spending by 55%, Amazon by 53% and Meta by 33%.
I am confident that the next wave of AI profits is going to come from these big early spenders.
