CNBC Investing Club: Hyperscalers Increase AI Spending Despite Rising Hardware Costs

In this Club Check-in, CNBC Investing Club's Paulina Likos and Zev Fima break down what really matters for investors after a flurry of earnings reports that highlighted both strong demand for artificial intelligence infrastructure and a continued surge in spending.

The AI trade faced a major test this week as several of the key hyperscalers reported quarterly results. The early read was that Alphabet, Microsoft, Meta Platforms, and Amazon all passed with flying colors, but beneath the strong headline numbers, a more nuanced debate is taking shape. Even as costs rise, particularly for memory and other hardware components, hyperscalers are leaning into spending, signaling that AI-related demand remains strong enough to justify even higher investment levels.

"Nobody's pulling back because of the higher memory costs — they're willing to just pay up," Zev said, pointing to the strength of underlying demand. In fact, combined capital expenditures across the four companies have meaningfully increased this fiscal year, raising the stakes for how and when that spending translates into returns.

But not all companies are viewed equally by investors. This discussion highlights a growing divide between companies that can clearly monetize AI today and those still working to prove the payoff. "As long as investors are seeing that AI spending is followed by higher revenue growth and profit growth, they're able to less scrutinize that spending," Paulina said. That divergence is shaping market reactions and could ultimately determine which stocks lead the next leg of the AI trade.

The conversation also explores where the biggest opportunities may lie, from cloud and advertising to internal efficiency gains, and why one company's ability to deploy AI across its own operations could give it a unique edge.