Apparently, building artificial intelligence requires two kinds of models: one that predicts the next token, and another that persuades a credit committee the GPUs will pay for themselves. This week, both were busy. Microsoft's September quarter produced $58 billion in operating cash flow against $39.4 billion of cash capital expenditure. Azure revenue grew 48%, and Microsoft repaid $4.9 billion of debt. That is an enormous construction project attached to an enormous cash machine. Microsoft's existing business gives it considerable room to finance the next one. The infrastructure bill is intimidating; the ability to pay it is rather reassuring. Alphabet's spreadsheet was more dramatic. Google Cloud revenue grew 103%, but capital spending of $51.4 billion exceeded operating cash flow of $42.3 billion, leaving negative free cash flow of $9.1 billion. Alphabet also raised approximately $29 billion through debt issuance. The customers are showing up. Unfortunately, so are the invoices....
learn more
