Amazon and Alphabet’s Cloud Investments Highlight Strong Economics
Amazon and Alphabet are both heavily investing in cloud infrastructure amid rising demand, revealing robust returns on investments. Amazon plans to spend approximately $220 billion in 2023, with a backlog of $496 billion and expectations that AWS could reach $1 trillion in revenues. The company has achieved breakeven on server investments in under three years and anticipates remaining capacity-constrained through 2027.
On the other hand, Alphabet aims to allocate up to $205 billion this year, with a backlog of $514 billion. The company reports a payback period of less than two years for its server investments and improves performance using its custom Tensor Processing Units (TPUs). Alphabet’s cloud services are estimated to provide 2.7 times better price performance for training, further bolstering its competitive edge in the market.
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