When it comes to spending, big tech companies have their wallets wide open, ready to use the credit card with no limit if necessary. This is especially the case when it comes to cloud computing spending alongside artificial intelligence (AI).
Google’s Cloud Splurge
For example, Google beat expectations in its latest earnings, but a closer look at its capital expenditures (CapEx) reveals a trend: more cloud spending. Upon the release of earnings, the company estimated that an $85 billion CapEx spend for 2025 is due to growing demand for its cloud products and services. It’s a $10 billion increase from initial forecasts in February, and as CNBC noted, much higher than the $58.84 CapEx estimates from Wall Street at that time. The current expected $85 billion CapEx will be over 40% of Wall Street’s February estimates.
The old adage of “it takes money to make money” certainly applies in this case. When looking at Google’s revenue generation from cloud computing, the spending is substantiated. Q2 earnings from cloud computing revenue were 32% higher, as demand for its cloud services is exceeding the company’s ability to provide ample supply.
“It’s a tight supply environment,” said Alphabet finance chief Anat Ashkenazi.
With demand for cloud computing increasing, getting the infrastructure up and running comes with challenges. Google’s Q2 expenditures mainly went into servers, data centers, and other networking equipment. While acknowledging the technical infrastructure challenges, Ashkenazi noted that the company is improving in getting the tech up and running at a more accelerated pace. That also means, however, that spending is expected to rise in 2026.
“We’re increasing capacity with every quarter that goes by,” Ashkenazi said.
To back up that spending claim, Google is dumping $9 billion into its cloud as well as AI infrastructure in Oklahoma. This will include a massive data center campus that will include education and workforce programs, per a Reuters report.
Google’s Peers Also Spending
The cloud spending spree isn’t isolated to just Google. Amazon, for example, is spending $4 billion on cloud infrastructure in Chile. Microsoft is estimating that it will spend $80 billion in 2025, with the hopes that it will result in $25 billion in revenue generation for 2026. As guessed, part of that $80 billion will be poured into cloud computing.
If looking at the performance of the cloud computing industry as a whole, the ISE CTA Cloud Computing Index will provide an indication. It’s up 2.43%, but still looking to reach its pre-Liberation Day levels.
ETFs to Look At
With big tech pouring funds into cloud computing, this should be a boon for cloud-focused ETFs. Traders looking to make a play on the whole industry will want to look at the the Direxion Daily Cloud Computing Bull 2X Shares ETF (CLDL).
Traders who want concentration in individual names can use single-stock ETFs to maximize their profit potential. Direxion provides 2x exposure to the aforementioned names like Google, Amazon, and Microsoft with the following funds:
- Google: Direxion Daily GOOGL Bull 2X Shares (GGLL)
- Amazon: Direxion Daily AMZN Bull 2X Shares (AMZU)
- Microsoft: Direxion Daily MSFT Bull 2X Shares (MSFU)
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