AI: Mag 7 Strong Quarters & Rising AI Spend, Apple's 'staggering demand', Elon's 'showcase' OpenAI trial+. AI-RTZ 1074

Michael Parekh AI: Reset to Zero

7 hours ago

6 MIN READ

Mag 4 of 7 Report Strong Quarters & AI Capex: The four big techs, Amazon, Meta, Microsoft, and Google all reported strong quarters. And renewed AI data center capex spend for 2026 and beyond. Amazon remains highest at $200 billion, with Microsoft and Google at $190 billion each, followed by a $145+ billion upper range from Meta, vs $135 billion previously. Microsoft explained that $25 billion of its $190 billion number is due to rising component prices. This provides a 10%+ inflation bump from supply chain constraints for chips and other components that is a useful proxy for all the rising capex numbers. We already know that memory chip supply constraints and price increases have been hampering both cloud and local compute providers for months now. Markets responded positively to Google Cloud and Gemini strength in particular, while selling off a bit on Meta, and others. The report points to more of the same AI Infrastructure spending thread for Q2 in July and the rest of the year. More here.

Apple Q2 sees Strong iPhone & Mac demand: Apple CEO Tim Cook cited strong demand for the iPhone and other parts of Apple’s ecosystem, in the company’s second quarterly report. Services business, the second major revenue line after iPhone, is also on a strong trend, followed by Macs and other lines of the Apple product lineup and strategy. In particular, the Mac Mini is seeing multi-month delays due to strong demand for OpenClaw inspired AI Agent deployments, and other memory and chip component shortages. Apple is raising Mac Mini prices, due to supply and pricing constraints, and in the face of AI Agent driven developer demand. Also popular with lengthy delays are orders for Apple’s new iPhone chip macbooks, the Neo line. As I outlined earlier, this represents a new ‘value’ line opportunity for Apple relative to its historic financial success with its line of computers, smartphones and wearables. Apple remains poised to roll out a Google Gemini powered Siri and other product upgrades later this year. Particularly after the June WWDC Developer conference, which should see upgrades of its core operating systems and other software. Apple is also shifting its long standing cash and debt strategy to more cash given current environment. More here.

OpenAI’s ‘Stormy Weather’: While OpenAI continues to roll out upgrades to its LLM AI products with ChatGPT 5.5 and ChatGPT Cyber, it seems to be missing some growth and financial metrics ahead of a late 2026 IPO. OpenAI also had other related product enhancements and expansions around its Codex product for developers. Especially as its being rolled out beyond Microsoft to Amazon AWS and beyond (see next item). This despite some product glitches that are being addressed. However, OpenAI remains playing catch up to Anthropic’s momentum with Claude Code and Cowork in the developer and enterprise markets. Despite the ‘stormy’ headwinds, OpenAI remains on track with its product upgrades and distribution plans beyond Microsoft Azure, to other partners like AWS. Also, OpenAI continues to make strides expanding its AI Data Centers via partners like Oracle, CoreWeave and others, with a compute infrastructure that is growing larger and faster than arch-rival Anthropic. More here.

Microsoft/OpenAI New Deal: OpenAI and Microsoft finally recast their longstanding partnership with a revised operational and financial roadmap on working together. Key provisions include removing the AGI threshold for the end of the partnership in 2032, and redoing the revenue share agreements between the two companies. The amended deal opens the door for OpenAI to sell its AI products via other cloud companies like Amazon AWS and others. Microsoft keeps getting a share of OpenAI’s revenue until 2030 regardless of whether AGI is achieved. Microsoft also retains the rights to use OpenAI’s models and products until 2032, but the IP rights will no longer be exclusive. Microsoft also does not have to share 20% of its OpenAI related sales, while getting a piece of OpenAI revenues from other cloud providers. That toll arrangement is a key provision of the revised deal with no more AGI time-gated threshold. Also, Microsoft does not get a piece of any OpenAI/Jony Ive consumer AI products coming down the line. This includes a possible OpenAI Smartphone in the early planning stages. There are a lot more details to the deal that are worth noting, but overall it provides key ‘wins’ to both sides to move ahead with other partners and providers. It’s also timely for OpenAI, as it gets its business, financial and operational metrics focused on a late 2026 IPO. More here.

Elon’s OpenAI ‘showcase trial’: The week also saw the launch of a month long Jury trial led by Elon Musk against OpenAI, over the evolution of its journey from non-profit to for profit. The deal is a ‘showcase’ trial driven by Musk, designed to maximize positive PR for Elon’s SpaceX/xAI IPO this June, and negative repercussions for OpenAI’s Sam Altman led IPO efforts for year end 2026. A low probability verdict against OpenAI could reshape who controls OpenAI beyond Sam Altman and Greg Brockman. The case stems from a Musk 2024 lawsuit accusing both the OpenAI founders and Microsoft of betraying the company’s original nonprofit mission to “benefit humanity”. The initial days of the trail have been a bit rocky for Musk, with testimony that came across as ‘unfocused and uncharming’. Musk ended up admitting claims that xAI distilled OpenAi models for its AI model Grok’s training, as being ‘partially true’. The Judge also barred off AI existential debates in the trial, a direct nod to Elon using his 200 million plus X followers to cast himself as ‘AI’s good guy’. It’s going to be a long four weeks. More here.

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