Alphabet Outgrows Amazon's Cloud as Both Spend Big on AI

The two companies reported strong second quarters in late July while investing record amounts in AI data centers. Alphabet's full stack approach ties its custom silicon to Gemini models and distribution through Search and YouTube, so one data center can serve advertisers, consumers, and cloud clients at once. Gemini processes 22 billion API tokens per minute, which suggests that capacity stays busy. Amazon, by contrast, spreads capital across Trainium chips, robotics, nearly 400 Leo satellites, and Zoox robotaxis, and Bedrock hosts rival models as a customer-choice pitch.

Funding the buildout is Alphabet's next test. It raised about $70 billion in equity and debt and suspended buybacks, and its long-term debt climbed from $46.5 billion to $98.2 billion. Amazon's trailing free cash flow totals -$7.6 billion, and management expects pressure until new data centers start making returns. The author says Alphabet has gotten more for its money, and notes that Alphabet shares rose 49.49% over the past year versus 19.95% for Amazon, even as Alphabet trades at about 23 times forward earnings against Amazon's 24.