SpaceX Capex Outstrips Revenue

Filing for an IPO, SpaceX said it generated revenue of 18.7 billion US dollars in 2025, up 33% year-on-year. Connectivity revenue rose almost 50% to 11.4 billion dollars. Space revenues were up just 7.6% to 4.1 billion dollars.

Capital spending climbed 86% to 20.7 billion dollars, as SpaceX ramped up investments in AI infrastructure.

In May 2026, SpaceX entered into cloud services agreements with Anthropic, an AI research and development public benefit corporation, to access compute capacity across SpaceX's COLOSSUS and COLOSSUS II data centres. It said Anthropic has agreed to pay 1.25 billion dollars per month through May 2029, with capacity ramping in May and June 2026 at a reduced fee. Source: SpaceX IPO prospectus

Apollo Go More than Doubles Rides

In the first quarter of 2026, Apollo Go, Baidu's self-driving ride-hailing service, "delivered 3.2 million fully driverless operational rides, with weekly rides peaking at over 350,000 in March."  Total rides were up by more than 120% year-over-year.  By way of comparison, Waymo says it is delivering 500,000 "fully autonomous" rides per week.

In Europe, Apollo Go said it is on track to commence open-road testing in Switzerland, and expects to begin testing in London with Uber and Lyft soon. In the Middle East, Apollo Go's fully driverless operations are running across multiple zones in Dubai, following the launch of the Apollo Go app in March.

Apollo Go says its fleets have accumulated more than 220 million fully driverless autonomous kilometres. Source: Baidu statement

Capital Spending by the Magnificent Seven

 

An AI arms race is sparking a massive surge in capital spending by the major cloud service providers.

Deutsche Telekom Sees Steady Growth

Deutsche Telekom reported a 4.7% year-on-year rise in revenue in organic terms for the first quarter to 29.9 billion euros, propelled by a 6.1% rise in revenues in the US. In Germany, revenues rose 2.1%.

The telco said that more than 13 million homes in Germany can now directly connect to its fiber-optic network, while the number of homes taking out a FTTH (fibre-to-the-home) contract has now reached 2.2 million - the penetration rate has climbed from 15.5% to 17.1% over the past 12 months.

T-Mobile US reported a 6% year-on-year increase in the number of postpaid accounts to 34.4 million at the end of March 2026.  The operator defines a postpaid account as a billing account which is used to bundle multiple contracted services, such as mobile communications, 5G internet, and fiber-optic lines, as well as various connected devices including smartphones, tablets, hotspots, and wearables. For the 2026 full year, T-Mobile US expects postpaid net account additions of between 950,000 and 1,050,000, up from the 900,000 to 1,000,000 anticipated at the start of the year. Source: Deutsche Telekom statements

Bumper Quarter for the iPhone

Apple reported a 17% year-on-year increase in revenues for the quarter ending March 28th to 111.2 billion US dollars, driven by a 22% leap in iPhone revenues and a 16% rise in services revenues. However, Apple's R&D spending rose 32% year-on-year to 11.4 billion dollars.

Apple said it expects total revenue to rise between 14% and 17% in the current quarter, despite supply constraints. Source: Apple statements

Alphabet Even More Bullish on AI

Alphabet reported a 19% year-on-year increase in revenue in constant currencies for the first quarter of 2026 to 110 billion US dollars. Cloud revenues were up 63% to 20 billion dollars, driven by strong demand for AI models, such as Gemini 3, and AI infrastructure "due to continued deployment of TPUs and GPUs."

Alphabet also said its revenue backlog nearly doubled quarter-on-quarter to more than 460 billion dollars, with the majority related to Google Cloud Platform agreements. Just over half of the backlog will convert to revenue in the next 24 months, the company said, with TPU hardware sales beginning to come through as revenue later in 2026, with more in 2027. 

Alphabet said its AI model Lyria 3 has generated more than 150 million songs since launching on the Gemini App in mid February, while Nano Banana 2 has created one billion images in nearly half the time of Nano Banana 1. Alphabet reported it now serves 350 million paid subscriptions, with YouTube and Google One being the key drivers.

The company raised its full year capital spending guidance by five billion dollars to 180 billion to 190 billion dollars, following the recent acquisition of Intersect, which provides data centre and energy infrastructure.

Noting that its strong results "reinforce its conviction" to invest to capture the AI opportunity, Alphabet said it expects its 2027 capex to be significantly higher than in 2026. 

Alphabet's self-driving unit, Waymo, is now operating in 11 US cities and is delivering 500,000 "fully autonomous" rides per week, doubling in less than a year. The company's Wing drone delivery service "continues to expand across the US in partnership with Walmart and Doordash." Source: Alphabet earnings.

T-Mobile US Prepares for Physical AI

As T-Mobile US deploys artificial intelligence (AI) to enhance its radio access network, it is bringing compute capacity closer to end users, Srinivasan Gopalan, CEO of T-Mobile US, noted in an earnings call with analysts. "As we build more AI into our network, we will generate a bunch of fallow compute, especially at the edge. Now the fallow compute plus low latency creates an incredible opportunity because if you're thinking of scale, automation -- it's impossible to do that without low latency," he said. "Low latency has to be essential to any form of robotics or automation that you do."

The telco's 5G Advanced network means it is well placed to serve the demands of so-called physical AI (robotics) systems, John Saw, president of technology at T-Mobile US, added.  "We have a bunch of innovations that we have developed with 5G Advanced to increase spectral efficiencies and capacity like especially for the uplink, which is really needed for physical AI, like things like uplink transmit switching, higher transmit power and uplink MIMO, right?... we believe that we have a multiyear advantage over the competition for this." Source: T-Mobile US collateral

Amazon Talks Up In-House AI Chips

Amazon reported its net sales increased 15% year-on-year on a constant currency basis to 181.5 billion US dollars in the first quarter.  “AWS is growing 28% (our fastest growth in 15 quarters) on a very large base, our chips business topped a 20 billion dollar revenue run rate (growing triple digits year-over-year), advertising grew to over 70 billion in TTM revenue, and unit growth in our stores reached 15% (the highest since the tail end of covid lockdowns)," said Andy Jassy, CEO of Amazon. 

He also claimed that Amazon's Trainium chip, which is designed for AI, will save its tens of billions of dollars of capex each year "and provide several hundred basis points of operating margin advantage versus relying on others' chips for inference." 

Jassy noted that the faster AWS grows, the more short-term capex Amazon will spend. "AWS has to lay out cash for land, power, buildings, chips, servers, and networking gear in advance of when we can monetise it, typically six to 24 months before we start billing customers, depending on the component," he explained. "However, these capex investments fund assets with many year useful lives, 30+ years for data centres, five to six years for chips, servers, and networking gear."

Jassy also cautioned that in times of "very high growth like now, where the capex growth meaningfully outpaces the revenue growth, the early years free cash flow is challenged until these initial tranches of capacity are being monetised and revenue growth outpaces capex growth."

Claiming that billions of people do not have access to broadband connectivity, Jassy said that Amazon Leo, its satellite arm, will "be one of two offerings that are on the current technology edge, and I think that we will have a meaningful advantage in performance. I think we'll be about 2x better on the downlink than existing alternatives and about 6x better on the uplink performance than existing alternatives. I think we'll have a cost advantage for customers."

He suggested Amazon Leo will become a "many billion-dollar revenue business", but will, like AWS, be capital intensive upfront. Source: Amazon earnings call transcript