[News] Big Four CSPs Capital Expenditures Surge, Driving Demand for Taiwanese AI Supply Chain

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The latest quarterly reports from the big four cloud service providers (CSPs) have been released in succession. According to a report from Commercial Times, not only has there been significant revenue growth, but capital expenditures for these CSPs have also surged compared to the same period last year, underscoring the ongoing momentum in AI investments.

Industry scources cited by Commercial Times estimate that capital expenditures by CSPs will surpass USD 240 billion by 2025, reflecting an annual increase of over 10%.

The report indicated that the increase in capital expenditures by CSPs is expected to boost demand for Taiwanese companies in the supply chain during the fourth quarter of this year and into next year, benefiting companies such as Quanta, Wistron, Wiwynn, and Inventec.

According to the report, Microsoft’s capital expenditures for the first quarter of fiscal year 2025 (the third quarter of 2024) reached USD 20 billion, higher than USD 19 billion of the previous quarter, reflecting a 78% increase year-on-year. Microsoft noted that the demand for AI now exceeds available production capacity, and they plan to continue increasing investment, expanding data center construction, and promoting AI services.

The report indicated that the market estimates Microsoft’s total expenditures for fiscal year 2025 will reach USD 80 billion, an increase of over USD 30 billion compared to the previous year.

Google’s capital expenditures in the third quarter reached USD 13.1 billion, an annual increase of 62%, which means that total capital expenditures in 2024 will reach USD 51.4 billion, an annual increase of 59%, and capital expenditures will continue to increase next year, according to the report.

Amazon’s capital expenditures for the third quarter reached USD 22.62 billion, reflecting an 81% year-on-year increase. This year, Amazon’s total capital expenditures have reached USD 51.9 billion, and full-year investments are projected to be as high as USD 75 billion. Furthermore, capital expenditures for next year are expected to be even higher, as the report indicated.

According to the report, as for Meta, capital expenditures in the third quarter were USD 9.2 billion, an annual increase of 36%. Moreover, Meta adjusted their capital expenditure forecast for fiscal 2024 to an upward revision of USD 40 billion. The report indicated that its capital expenditures will continue to grow in 2025.

The report highlighted that AI business opportunities will continue to benefit Taiwan’s major server ODMs. Companies such as Quanta, Wistron, Wiwynn, Inventec, and Foxconn all reported strong results in the third quarter and are optimistic about the fourth quarter and the year ahead.

According to the report, Quanta’s third-quarter revenue reached a record high, driven by strong demand for AI server orders. Quanta Chairman Barry Lam also expressed an optimistic outlook on the future of AI, noting that as large-scale CSPs develop generative AI applications, the scale of AI data centers is continually expanding, leading to a substantial increase in orders.

After demonstrating strong growth momentum in the first half of the year, Wistron has benefited from urgent orders in the second half. Additionally, some B200 series products utilizing the next-generation Blackwell platform are scheduled to be shipped after the fourth quarter. The report indicated that Wistron is quite optimistic about its performance for this quarter and next year.

Inventec plans to ship servers to customers primarily from US-based CSPs in the second half of the year. The report highlighted that orders from Google have increased as the company expands its purchase of AI servers based on its own TPU architecture, in addition to acquiring general-purpose servers for new platforms.

Read more

• High-End AI Server Demand from North America’s Top Four CSPs Expected to Exceed 60% in 2024, Says TrendForce
• [Insights] Big Four CSPs Continue to Shine in Q1 2024 Financial Reports, AI Returns Garnering Attention

(Photo credit: Microsoft)