WSJ What’s News - Big Tech Rakes In the AI Revenue

Episode Date: April 30, 2026

A.M. Edition for April 30. After several years of massive infrastructure spending, four of the biggest names in tech reported sales growth yesterday thanks to the proliferation of AI tools. WSJ deputy tech bureau chief Bradley Olson details how companies are dipping into their cash reserves and announcing layoffs to accommodate massive AI spending, and how investors are responding. Plus, the White House opposes Anthropic’s plan to expand access to its powerful Mythos AI model over security concerns. And can LIV Golf survive after Saudi Arabia pulls funding for the PGA Tour rival? Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Learn more at aWS.com slash quick. Oil prices jump to a new wartime high on fears of renewed escalation with Iran. Plus, AI finally starts making money for big tech, but not without a rethink of their balance sheets. They had tremendous cash flow, and that's kind of changing in order to afford the kind of spending that they're going to have to make. They're changing the way they operate and they are becoming kind of more indebted and using that to pay for AI. infrastructure and data centers, and they're also cutting staff. And can live golf survive without Saudi funding? It's Thursday, April 30th.

I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Big tech companies are starting to strike gold with artificial intelligence. Four of the biggest names in tech, Microsoft, Alphabet, Meta, and Amazon, all reported earnings yesterday, showing that sales are growing thanks to the proliferation of AI tools. That progress, however, is coming at a steep cost with capital expenditures for data centers and chips soaring. So what are investors making of it all? Bradley Olson is our deputy tech bureau chief and joins me now from San Francisco.

Bradley's companies together are spending more than $650 billion this year to build out AI infrastructure. That is more than the cost of the Apollo Space Program, the U.S. interstate highway system and even the U.S. railroads built out back in the 1850s. It's crazy. Yeah, it just went up across the board. And it seems each quarter, the story is kind of the same. We're all just kind of waiting and saying, how high is the number going to go? And how are we going to find new ways to understand what $200 billion means in spending? So, like, Microsoft, I think, is up to $190 billion in the 26 year. And all of the other other companies went way up too. And so I think it's like every time it goes up, you have to find

these new kind of historical comparisons because it's just hard to get your mind around just how much they're spending. And yet these businesses are signaling this spending is something they can accommodate, that we should say meta recently announced they're going to lay off 10% of their staff in order to sustain this. So I guess it's not all coming without some adjustments to the balance sheet. Absolutely. I think in the end, these companies, at least kind of by the rubrics of Wall Street, were always well capitalized. They had tremendous cash flow. And that's kind of changing in order to afford the kind of spending that they're going

to have to make. They're changing the way they operate and they are becoming kind of more indebted and using that to pay for AI infrastructure and data centers. And they're also cutting staff. You know, you mentioned meta. That was one example. And Microsoft also offered buyouts. And they said it'll be another year in which their head count will go down.

I think it's safe to say if these companies were paring down their cash holdings, you know, borrowing heavily to engage in this CAPEX and there were no AI revenues to offset that. Investors would have some big problems. And yet it seems like the revenue side of the AI buildout is now finally starting to show some signs of life across these earnings. That may be kind of these companies saving grace. Absolutely. You're seeing it in different companies manifest in different ways. So for meta, you know, it's kind of an advertising story. AI tends to help with ad targeting.

I think that's happening a little bit with Google as well. And then with Google, you also have typical things like subscriptions, uses of Gemini, their AI model. And then you have people ordering Google's chips. And so Google kind of has a full stack of revenue opportunities, you know, ways to get customers in many different kinds of ways. Microsoft offers cloud access. And then the number of paying subscribers for co-pilot went up about 33 percent, and it's 20 million now. It's not a huge number when you look at the entire volume of Microsoft users and paying Microsoft users. But in the end, these numbers are starting to get high for all the different companies.

And then, of course, Amazon's cloud growth, they have so many customers that are inside the AWS system. One thing that we saw even recently is OpenAI did this deal with Amazon and with Microsoft, so that OpenAI could be an option inside of what's called Bedrock, Amazon's platform for developing AI. and AI agents. And so there's big opportunities for growth for Amazon as sort of a platform and a go-to place where you can go. So across the different companies, there is a revenue story. I just think the numbers are so high that investors are just trying to kind of constantly

gauge their comfort level with the spending relative to what these revenue numbers are going to be. Meta had a really rough earnings, for example. They're down about 7% after market and some of the things that are. I saw. And I think that was just because the spending increase was really, really a little higher than investors expected it to be. But putting that aside, Brad, I mean, it seems like the broad narrative around these earnings is actually that this was by and large the quarter when demand for AI and the revenue

stemming from that demand really took hold. So, you know, people measure it in something called tokens. But it is on a trajectory that is almost like a double exponential. So if you're making a bet on a data center, a lot of companies, there is investor concern about the level of indebtedness, the level of spending, but then you can look and say, well, how much demand is there for AI? And then you look at these token usage, and it's just going up in a way that's almost doesn't resemble any other product in history. And so that, I think, is giving investors a little bit more confidence about, you know, these data centers and the

infrastructure build out, you know, paying out in the end. Bradley Olson is the Wall Street Journal's Deputy Tech Bureau Chief. Brad, thanks for coming on. Thanks for having me. Really appreciate being on. Coming up, we've got the rest of the day's news, including a fresh surge in gas prices. And we'll look at what's next for LiveGolf as Saudi Arabia plans to cut off funding. Those stories and much more after the break. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community.

Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IDPrivatewealth.com. Oil prices have hit new wartime highs today following journal reports yesterday that President Trump was preparing for an extended blockade of Iran and comments from him suggesting he's losing patience with the regime in Tehran. into that environment, we're now exclusively reporting that U.S. diplomats are being asked to try and persuade governments to join an effort to help jumpstart shipping traffic through the Strait of Hormuz. I asked Journal Middle East correspondent Jared Malson, what to make of that.

What our colleagues are reporting this morning is that the State Department is urging other countries to join what they're calling a maritime freedom construct that they've spelled out in a State Department cable. The issue with this is that they've tried to do this before. Trump has obviously been very vocal about his displeasure with European countries, specifically not signing up to some kind of military coalition that might reopen the strait, and it's unclear whether anyone is going to sign up to this new initiative now. While the conflict in the Middle East is also dealing a major blow to Europe's hopes for an economic revival, with France and Spain both reporting a slowdown in growth to start the year, As a net importer of energy, Europe is more exposed to surging energy costs that have made consumers fearful of rising inflation and sent business activity to a 17-month low.

Economics reporter Chelsea Delaney said that's complicating a pair of major rate decisions due in the coming hours. For both the European Central Bank and the Bank of England, we're not expecting them to change interest rates today. Central banks here in Europe, the Fed, they're facing this real dilemma because the war, in the Middle East is pushing them in two different directions. On the one hand, it is raising inflation, which in many cases their response to that would be to raise interest rates. But it's also really clouding the growth outlook. So higher energy prices mean that people are likely to spend less on other things and companies as well. So that means growth is likely going to take a hit. Raising interest rates will weigh on growth even more. After starting the year with expectations

for further rate cuts, both the ECB and Bank of England are now expected to raise rates twice in 2026. While those rate decisions will come shortly before today's US GDP print, the first reading of how the American economy fared in the first quarter, investors will be parsing that data, along with the Fed's preferred inflation gauge for signs of how the war in Iran is affecting underlying growth and consumer pricing. Both are due out at 8.30 a.m. Eastern. In more earnings, weight loss drug giant Eli Lilly will report results this morning, followed by Apple this evening. And if you can't get enough earnings updates, you're in luck. In the latest, Watts News and earnings, we'll be looking at what rising fuel costs mean for airlines and for travelers.

Look for that special bonus episode right here in your What's News feed at midday. The White House is opposing plans from Anthropic to expand access to its powerful new AI model mythos, which is able to find and exploit software vulnerabilities. Around 50 businesses and organizations that manage critical infrastructure have access to the model, and Anthropic had proposed widening that to a further 70. However, we exclusively report that Trump administration officials are opposing that move because of security concerns and worries that Anthropic lacks the computing power to expand the mythos rollout without hampering the government's ability to use the tool effectively.

Anthropics said last week it's investigating potential. unauthorized access to mythos, adding to fears about its ability to facilitate cyber attacks. Staying in Washington, House Republicans have passed a budgetary framework to fund DHS's immigration enforcement arms, setting them up to craft a reconciliation bill that would fund ICE and Border Patrol. The House also narrowly approved a three-year extension of a contentious foreign surveillance power and voted to ban central bank digital currencies, though GOP leaders in the Senate say that measure is a non-sterval. starter. And a brief correction, because on yesterday's show, I incorrectly referred to Louisiana

Republican Mike Johnson as the House Majority Leader during our coverage of the DHS funding debate. He is, in fact, the House Speaker, while Steve Scalise is majority leader. And finally, Saudi Arabia is pulling the plug on LiveGolf, the upstart circuit that's been dividing the professional golf world since it first teed off in 2022. We report that Saudi Arabia, Arabia will end its funding after this season, leaving an uncertain future for the league's players and fans. Players and executives have been fielding questions about the future of the league since Saudi Arabia's public investment fund laid out its five-year plan recently with no mention of Liv. At a recent tournament in Mexico, Liv CEO Scott O'Neill said the

business is in good shape, no matter. From a business standpoint, we did almost half a billion in sponsorship last year with big brands like Rolex and HSBC and sales. These are global brand. A ramco, global brands. So I am like thinking we're in a wonderful position. From a structural standpoint, this business will continue to evolve as it has over the last 12 months. Another evolution to watch could be the process for players wishing to return to the PGA

tour after some left for live in violation of their PGA contracts and were suspended. And that's it for this Thursday morning's edition of what? It's News, the show where you're always welcome back, no matter if you've listened to other podcasts in the past. Today's show was produced by Daniel Bach. Our supervising producer is Sandra Kilhoff, and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. And until then, thanks for listening.