Earlier this week, on my AI Ramblings Daily podcast (ARD-63), I discussed Elon Musk’s ‘annoyance’ lawsuit of choice against Sam Altman, founder/CEO of OpenAI. Yes, the OpenAI that Elon himself was a co-founder of,over a decade+ ago.

It’s a four-week jury trial that will get gobs of global media attention. Weeks before both SpaceX/xAI’s own mega-AI IPOs, scheduled in time for Elon’s birthday in June. And of course the OpenAI/Anthropic mega-AI IPOs scheduled for year-end.

Axios summarizes the trial kick off in “Elon gets his day in trial against OpenAI”:

“Elon Musk took the stand as the first witness in his billion-dollar lawsuit against OpenAI on Tuesday in federal court in Oakland, California.”

“Why it matters: A verdict against OpenAI could reshape who controls one of the most valuable private companies in the world.”

“The big picture: Musk is asking a court to put legal limits on OpenAI’s transformation from charity-backed research lab to AI superpower.”

• “Musk said it’s very simple. “It’s not OK to steal a charity.”

  

“Catch up quick: The case stems from Musk’s 2024 lawsuit accusing OpenAI CEO Sam Altman, co-founder and president Greg Brockman, and Microsoft of betraying the company’s original nonprofit mission to benefit humanity.”

• “Musk co-founded OpenAI in 2015. OpenAI says he donated $38 million before leaving the board in 2018.”

• “The CEO of SpaceX and Tesla now runs xAI, a direct competitor.”

There are some big Elon asks of the Jury and Judge here:

“Zoom in: Musk is seeking sweeping remedies, including changes to OpenAI’s corporate structure, removal of Altman and Brockman, and damages that he has said should go back to OpenAI’s nonprofit arm.”

• “His side has put the potential damages in the hundreds of billions.”

But as Sam would say from the OpenAI perspective, ‘not so fast’. Especially given the exotic origin story.

“The other side: OpenAI says Musk is motivated by jealousy and regret for walking away from OpenAI.”

• “The company says Musk donated $38 million to the OpenAI nonprofit, which was “spent exactly as intended and in service of the mission.”

• “Expect “a tale of two Elons,” attorney William Savitt, representing OpenAI, Altman and Brockman, said in his opening statement.”

• “Russell Cohen, representing Microsoft, asserted that Musk changed his tune about OpenAI’s non-profit status only after the success of ChatGPT.”

In the meantime, the judge in the case knows exactly what the real goals are here beyond the lawsuit:

“Friction point: U.S. District Judge Yvonne Gonzalez Rogers warned Musk and Altman ahead of opening arguments to keep the fight off social media.”

““Control your propensity to use social media to make things worse outside this courtroom,” the judge said.”

• “Musk alleged on X Monday that Altman and Brockman “stole a charity,” accusing both of securing personal benefits while referring to Altman as “Scam.”

• “Musk said in court on Tuesday blamed the other side. “Only after they posted very publicly about this case, only then did I respond,” he said.”

Expect this silicon valley soap opera to continue for a month at least, designed to hobble a specific event as much as possible:

“What’s next: The trial is set to run roughly four weeks. OpenAI is targeting a Q4 IPO at a reported $852 billion valuation.”

As the Verge further contextualizes in “Elon Musk appeared more petty than prepared”:

“In his opening testimony against Sam Altman, Musk was unfocused and uncharming.”

“Today the first witness was sworn in in Musk v. Altman: Elon Musk. I was surprised by how flat he seemed.”

“The direct examination is a way of telling a story through questions; it’s important to make the narrative clear. For a suit that accuses Sam Altman of straying from OpenAI’s mission, Musk spent a weird amount of time talking about himself, recounting his biography, and hyping up the various ventures he’s undertaken that have nothing to do with OpenAI.”

The opening questioning also began to cover areas that will be fodder for the soap opera aspects of the story for future movies and TV shows:

“At another point, Musk was asked to explain who former OpenAI board member Shivon Zilis was. “Shivon was the, um, my chief of staff and, uh, you know,” Musk said. One person in the gallery — presumably familiar with the fact that Zilis is the mother of a few [four of 14+] of Musk’s kids — burst out in loud laughter. But the jury looked puzzled.”

Later in the week, Elon admitted claims that xAI distilled OpenAI models in AI model Grok training were ‘partly true’. The Judge also barred off AI existential debates in the trial. Elon of course is doing his best to cast himself as ‘AI’s good guy’.

All this is to highlight where this trial is likely to spill over the most beyond the core legal issues, driven by the personalities involved.

The merits of the case itself has many experts assert that no attorney would have taken the case on contigency fees. Implying of course that we would not be here were it not for Elon’s ample couch cushions, and emotions regarding OpenAI and Sam Altman.

It all makes for a unique backdrop to the technical plus financial forces and stresses driving this AI Tech Wave. And of course its mega-AI IPOs forward this year. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)

As I outlined on AI Ramblings Daily #63 podcast this Monday, four of the Mag 7 big tech companies reported their quarterly results this evening. The markets have been waiting and debating this day with bated breath, with swirling AI expectations around Amazon, Microsoft, Google and Meta of course. With Apple up at bat on Thursday.

All four reported their numbers and adjusted their AI capex budgets upwards. No major surprises there.

Here are the company reports from Amazon, Microsoft, Alphabet/Google and Meta. And for further convenience, the WSJ takes on AMZN, MSFT, GOOG and META releases on Wednesday. Google seemed to please investors the most after-market and Meta the least for now. All on results vs current expectations, and AI spend and product growth numbers going forward.

As the WSJ went on to explain in “Big Tech Strikes Gold With AI, but at a Steep Cost”:

“While Microsoft, Alphabet, Meta and Amazon ride AI to strong earnings, some investors are still worried about spending.”

“Big tech companies are starting to strike gold with artificial intelligence, but investors are still wringing their hands over the multibillion-dollar bets on data centers and chips.”

“Four of the biggest names in technology—Microsoft, Alphabet, Meta and Amazon —on Wednesday reported earnings showing that sales are growing thanks to the proliferation of AI tools. That progress, however, comes at a steep cost. Capital expenditures on the infrastructure needed to satisfy demand are climbing steadily higher.”

“Microsoft, Alphabet, Meta and Amazon last year combined for $410 billion in capital expenditures and are expected to spend more than $670 billion on capex in 2026, according to a Wall Street Journal tally. Morgan Stanley estimates that tech companies will spend $2.9 trillion on chips, servers and other pieces of data-center infrastructure between 2025 and 2028.”

And as expected, the highlight topic of management discussions, and investor questions in the post results conference calls, was of course how multi-hundred billion dollar AI investments are going this AI Tech Wave.

The NY Times summarizes it all in the AI context with “AI Spending Sets a Record, with no end in sight”.

“Google, Amazon, Microsoft and Meta reported more than $130 billion in quarterly capital expenditures on Wednesday as they build A.I. data centers. There’s more to come.”

“For the past two years, Amazon, Google, Microsoft and Meta have repeatedly set records for how much they are spending on artificial intelligence.”

“On Wednesday, the four giants did it again.”

“In the first three months of the year, the four companies reported in their financial results, they plowed a total of $130.65 billion into capital expenditures, largely spending on data centers that power A.I. That figure — which was another record — was more than three times what the Manhattan Project cost to develop nuclear bombs and 71 percent higher than what the tech giants spent in the same quarter a year earlier.”

There’s more to come indeed.

“Investors may need to brace for more spending. Meta, for one, raised its spending forecast for the year to between $125 billion and $145 billion, up from its previous prediction of $115 billion to $135 billion.”

“The spending showcased how the biggest tech companies are in the middle of a wildly expensive era of A.I., which many of them see as a once-in-a-lifetime chance to become far larger. And as the frenzy escalates, it’s increasingly only the planet’s wealthiest companies that have the money to lead this race.”

“That’s because Amazon, Google, Microsoft and Meta continue to dominate in core businesses that spew cash, such as serving ads on YouTube or Instagram, delivering items in a few hours or tallying cells in Excel. The companies generated a combined $431 billion in sales in the quarter and made $151 billion in profit.”

“They can handle it” because of their cash flow, John Blackledge, an analyst with the investment bank TD Cowen, said about the A.I. spending.”

For now, investors have reconciled with these trends and uncertainties on the revenue/profit side from AI products and services to come.

“For much of last year, Wall Street was jittery about whether the tech spending would bring in enough returns, but some investors have backed away from those fears. That’s partly because of the recent success of Anthropic’s Claude Code, an A.I. tool that lets users quickly generate code without knowing programming and a product that has become a juggernaut. This month, Anthropic said its March sales were the equivalent of $30 billion a year, up from $9 billion at the end of 2025.”

“The expectations are getting higher and higher,” said Arjun Bhatia, who covers tech companies for the investment bank William Blair.”

And of course, the two private AI mega-giants, OpenAI and Anthropic are along for the ride.

“The biggest tech companies have also formed deeper partnerships with the leading A.I. labs Anthropic and OpenAI, investing billions in them. In turn, Anthropic and OpenAI have committed to spending hundreds of billions on computing power that the tech giants provide.”

“Last week, Google and Amazon announced plans to invest up to a combined $65 billion in Anthropic, and they will provide the start-up with at least 10 gigawatts of computing power — or enough to power more than four million homes.”

“Google and, increasingly, Amazon have also seen traction developing their own A.I. chips to power the boom. Google has begun selling its chips to Anthropic, and Meta announced a multibillion-dollar deal last week to use some of Amazon’s chips.”

Also for now, Amazon AWS is ahead of the rest, with a global customer surface finally ready for the largest AI cloud infrastructure company.

“No company is spending more than Amazon, which has been racing to build data centers to satisfy demand for computing power. It has focused particularly on building Project Rainier, which are massive A.I. data centers for Anthropic.”

“Amazon spent $43 billion on capital expenditures in the quarter, primarily for data centers. Its cloud computing business — which slowed a year ago, before picking up steam more recently — generated $37.6 billion in sales, up 28 percent from a year earlier.”

Microsoft is not far behind, especially now with a clearer new relationship and agreement with OpenAI.

“Microsoft spent $31.9 billion in the first three months of the year, up 49 percent from a year earlier. Azure, its core cloud computing offering, and related A.I. services grew about 40 percent.”

And Google continues to press on its advantages with Google Cloud and its 8th generation TPUs.

Those are going up against Nvidia’s leading AI GPUs, with a growing AI training and inference token market big enough for both and then some.

“Google said its spending was $36 billion in the quarter, more than double the $17 billion it spent in the same period last year.”

“The internet giant has benefited from A.I. in several ways. Its Gemini A.I. system has become the backbone of Google Search, offering quick and complete answers that drive people to make more search queries. As a result, Google can serve more ads that are also more relevant. For the first three months of the year, Google said, sales from search, its largest business, increased 19 percent to $60.4 billion.”

“A.I. has also helped Google’s cloud business. The company has signed $1 billion deals with new customers and persuaded existing customers to increase their spending. In the most recent quarter, its cloud sales rose 63 percent to $20 billion.”

That leaves Meta, with founder/CEO Mark Zuckerberg’s foot hard down on the AI gas pedal:

“Meta is in some ways an outlier, because its capital spending is for its own use, rather than for cloud computing that it sells to others. As it morphs from a social media company to an A.I. company, Meta is spending amounts similar to Amazon’s and Microsoft’s totals. For the quarter, it spent $19.8 billion, more than half of the $39 billion that it spent for all of 2024.”

“Meta has developed A.I. to increase user engagement and improve advertising on its social platforms, which include Facebook and Instagram. Revenue increased 33 percent to $56.3 billion in the quarter, a sign that the spending was accelerating growth.”

Of course there are the usual items to worry about:

“Some of the tech companies have justified their building binge by saying they cannot meet all the demand. But analysts said there were risks if the companies became too dependent on two young customers: OpenAI and Anthropic.”

“More than 40 percent of Microsoft’s $625 billion in outstanding cloud contracts, for example, come from OpenAI, the company said in January. This week, Microsoft and OpenAI announced new terms that loosened their ties.”

“Betting so much on OpenAI and Anthropic is a gamble. But even if the start-ups flop, the tech giants are likely to weather the losses because of their size, scale and other businesses, said Matt Stucky, who manages tech investments for Northwestern Mutual.”

But for now,

“The core business,” he said, “is good.”

The results are consistent with what I’ve been discussing in these pages, and on AI Ramblings podcast. Especially on yesterday’s ARD 65 with the the theme of “AI Infrastructure spend remaining resilient’ despite many supply constrained headwinds.

And in the context of the storms around OpenAI and other major AI private companies planning mega-AI IPOs this year. Not just this quarter of course, but the quarters to come in this AI Tech Wave.

Now we wait for Apple tomorrow, and of course Tesla and Nvidia soon in a few days. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)