DIGI: Big Tech Capex Hits Critical Limit

• Big Tech companies are expected to maintain or slightly raise CapEx guidance, with Amazon and Alphabet showing significant increases for fiscal 2026.
• AWS revenue growth is anticipated to be in the high 20s to low 30s percent, driven by AI stack and core business, with Amazon's CEO noting a $15 billion AI revenue run rate.
• Google Cloud revenue growth is expected to accelerate to mid-50s to mid-60s percent, fueled by its AI stack, Gemini model, and chips, with a notable increase in $1 billion deals.
• Market fragility is a concern, where even meeting expectations might not be enough, as seen with recent market reactions to internal target discussions.

The analyst discusses Big Tech's Q1 earnings, focusing on capital expenditure (CapEx) trends and cloud business growth. He highlights that while CapEx is rising, companies like Amazon and Alphabet have given themselves 'wiggle room' in their guidance. Key drivers for stock performance will be the revenue growth in AWS and Google Cloud, both showing acceleration driven by AI.