The four biggest North American cloud providers are pouring record money into AI, which is good news for chipmakers and server builders but raises the risk of a spending hangover later.

• Amazon, Microsoft, Alphabet and Meta are on track to spend a combined $745 billion this year, an all-time high.
• Cloud revenue at Amazon, Alphabet and Microsoft grew at the fastest pace since 2020, and all three sound upbeat about the rest of the year.
• Amazon, Alphabet and Meta have already raised their spending plans again, making this the year AI demand really takes off.
• The same companies plan bigger cost cuts and financial tightening in the second half to keep their books looking healthy.
• Google Cloud is one example: instead of chasing the most powerful Gemini model, it is pushing cheaper, lighter Flash versions.

Outlook: Expect the building spree to keep going while these companies quietly squeeze costs elsewhere to pay for it.