AI infrastructure spending surge

What happened: Amazon's AWS is growing at its fastest pace in nearly four years, driven by a surge in demand for AI computing capacity. Tech giants like Microsoft, Meta, Alphabet, and Oracle have collectively raised $250 billion in debt markets this year to fund AI initiatives. AI startups like Anthropic are signing multi-billion dollar cloud and data center deals, indicating a significant increase in AI infrastructure spending. The total expected spending on AI infrastructure by major players is around $800 billion.

Market impact: The AI infrastructure spending surge is driving growth in the cloud computing and data center sectors. Tech companies are investing heavily in AI, fueling a record stock market surge and driving up long-term Treasury yields. This spending is also boosting GDP and stock valuations, but it's happening as real wages fall and Americans cut back on goods. The AI boom is creating opportunities for data center providers like Applied Digital, with shares rising following a $7.5 billion lease with a U.S. hyperscaler.

What to watch next: In the coming months, investors should watch for earnings reports from major tech companies to gauge the extent of AI spending and its impact on their financials. Specifically, Microsoft's earnings report on July 25 and Alphabet's on July 26 will provide insights into their AI spending strategies. Additionally, keep an eye on regulatory decisions regarding EU's AI datacenter fund, as the French consortium AION is expected to bid for it.