Amazon, Alphabet profits show AI spending cycle reinforcing itself

Amazon and Alphabet's recent earnings highlight a structural feature of the AI boom that has significant competitive and economic implications. Rather than AI adoption spreading uniformly across the technology sector, it is concentrating profit and investment within the companies that control foundational cloud infrastructure. The circular nature described in the article—where customers' AI spending directly finances the providers' next round of infrastructure expansion—creates a powerful feedback loop that makes it difficult for smaller or newer entrants to compete. This dynamic is economically efficient in the short term, as it channels capital toward providers with proven scale and reliability; however, it also deepens customer dependency on a small number of firms. The article's framing suggests that this concentration may not be indefinitely sustainable, particularly as AI becomes more commodified and customers' own margins on AI-driven products face pressure.