Brian McCullough (0:04)

Welcome to the Techmeme ride home for Thursday, July 31, 2025. I'm Brian McCullough. Today, Microsoft and Meta Earnings suggest AI is paying off so far, at least for the big guys. Has OpenAI's revenues tripled so far in 2025? Devs are using AI more than ever, but that doesn't mean they trust it. And at the end of the show, as promised, the huge podcast announcement. Here's what you missed today in the world of tech, Microsoft has become the second company ever to surpass $4 trillion in market cap, joining Nvidia, which had become the first. I don't know if we mentioned that after Microsoft shares jumped after reporting better than expected earnings results. Why? Well, AI, sort of. Quoting CNBC, Microsoft reported 18% revenue growth, its fastest rate of expansion in over three years, driven by its Azure cloud computing business. Microsoft disclosed Azure Reven in dollars for the first time and said sales from Azure and other cloud services exceeded $75 billion in fiscal 2025, up 34% from the prior year. Nvidia and Microsoft, two of the biggest beneficiaries of the artificial intelligence boom, have zoomed past Apple on the market cap leaderboard. Apple is third at about $3.2 trillion, with its stock having fallen 17% this year as investors worry that the iPhone maker is getting left behind in AI. Apple reports quarterly results after the bell on Thursday. Among tech's mega caps, Nvidia has been the best performer in 2025, up 33%. The chip maker's graphics processing units are the backbone of the large language models being developed by Microsoft, OpenAI, Google, Meta and others. And they're filling up data centers being built by those same companies. I said sort of AI, because basically it was for Microsoft, all about the Azure numbers, which were up 39% versus the 34.7% that analysts had been estimating. So people are spending on Azure to do AI stuff a lot, I guess, but also the spending on the build out of infrastructure to serve AI continues, quoting Reuters. Microsoft forecasts on Wednesday a record $30 billion in capital spending for the current fiscal first quarter after booming sales in its Azure cloud computing business showcased the growing returns on its massive bets on artificial intelligence. Microsoft's higher than expected capital expenditure forecast, its largest ever for a single quarter, put it on track to potentially outspend its rivals over the next year. It came after Google said it would spend more on data centers to meet demand for AI services, and Meta projected higher sales with only modest increases in spending. The trio of results could help resolve the investor questions about whether big tech is benefiting from its massive data center buildout with capital spending to reach $330 billion this year, end quote, and quoting the Times it wasn't too long ago that investors were worried that tech giants were spending too much on artificial intelligence. The rapturous responses to Meta's and Microsoft's latest earnings reports show that Wall street is now fully on board. Microsoft appears poised to enter the $4 trillion market capitalization club on Thursday, joining the chip maker Nvidia. Shares in Meta are up over 11%. That's despite both companies reporting heavy investment in AI infrastructure. Though it helps that they each reported blowout quarters, the numbers are staggering. Meta said that capital expenditures, which these days largely mean spending on AI data centers, could reach up to $72 billion this year. Microsoft said it planned to spend $30 billion on CapEx in just the current quarter alone. Both reports come after similarly big commitments disclosed last week by Alphabet, Google's parent company. Executives say this is only the beginning. Meta implied that spending in 2026 could hit $100 billion. Mark Zuckerberg, the company's CEO, outlined an expansive plan for what he calls a intelligence that will bolster its core businesses Building that, he suggested, justified the wallet busting compensation Meta is offering AI engineers. For its part, Microsoft suggested it could go up to $120 billion in the 2026 fiscal year. Investors seem to have accepted that the AI race is expensive. Consider, for instance, that OpenAI is now privately claiming to have 700 million weekly active users for its ChatGPT services, up from 500 million in late March. That kind of explosive growth is partly why the company expects to through $8 billion this year. But there's an extremely high bar. Microsoft reported a 24% jump in quarterly profit to $27.2 billion. Meta's quarterly earnings were up 36% at $18.3 billion. Amy Hood, Microsoft's CFO, justified her company's enormous expenditures by saying it was correlated with business demand. If that equation goes askew for these tech giants, investors patience may wear thin. End quote. Foreign as you heard there, Meta reported earnings that juiced their stock 10%. Quoting CNBC, Meta's second quarter sales grew 22% year over year, which was the same growth rate as a year ago. On a call Wednesday with analysts, CEO Mark Zuckerberg said Meta's artificial intelligence technology unlocked greater efficiency and gains across our ad system. The company said capital expenditures will come in between 66 and $72 billion, raising the low end of the company's previous estimate of between 64 and 72 billion. Meta said compensation related to hiring will be the second largest driver of growth and that these factors will result in a 2026 year over year expense growth rate that is above the 2025 expense growth. Reality Labs, Meta's unit tasked with developing virtual reality and augmented reality technologies, recorded an operating loss of $4.53 billion on $370 million in sales during the second quarter. The loss was less than Wall street estimates, but so were the expected sales daily. Active people for Meta's family of apps grew to 3.48 billion in the second quarter, ahead of analysts estimates of 3.45 billion. That's up from 3.43 billion in the previous quarter. Meta's total costs and expenses for the second quarter were 27.08 billion, which was a 12% year over year increase. Back to the Reality Labs reporting though, another $4.5 billion in losses there, which means that Reality Labs has lost Meta $70 billion just since 2020. When Mark Zuckerberg says he has cash to burn on investing in new things, he's not kidding. The Trump administration says Apple, Google, OpenAI, Amazon, Anthropic and more than 60 other companies have pledged to make data sharing across healthcare systems. Quoting Bloomberg Both Democratic and Republican administrations have long tried to make data sharing seamless across the disjointed U.S. health care system. The government steered billions of dollars toward digitizing paper records and promoting standards so electronic record systems could link to one another. But the effort has had uneven results, with health technology lagging industries like finance or media. Friction in the system creates frustration for patients and doctors. The latest effort from the Medicare and Medicaid agency focuses on two improving data sharing between patients and health providers and expanding the suite of apps for consumers. Those apps would focus on helping people manage obesity and diabetes, use artificial intelligence assistance for scheduling and checking symptoms, and cutting paperwork out of the check in process at medical appointments. The initiative will involve more than 60 companies and 11 health systems. The agency said its goal is to make it easier for seniors to sign up for health plans, find providers and give patients more access to their health data as a voluntary initiative. It's unclear what the consequences are for companies that don't follow through on their commitments. They agreed to deliver results by the first quarter of 2026, the agency said. People are already uploading health data like lab results into AI chatbots, said Mike Krieger, chief product officer at Anthropic, the company is committed to the data sharing standard promoted by CMS and its Chatbot, Claude will allow users to connect into these systems and, with patient consent, be able to bring in their health information, he said. For the weight loss app Noom, better connectivity would allow patients to seamlessly share lab results or other medical data. To do that today, many patients have to download the information and then manually upload a document or complete an intake form. Your lab's data for one provider group might be here, another one might be here, said Noom Chief Executive Officer Jeff Cook. Under this CMS framework, patients can use any trusted app to retrieve the complete medical record wherever it's stored, he said. End quote Foreign Source has told the information that OpenAI's monthly revenue 2x in the first seven months of this year, hitting $12 billion in annualized revenue, the company's overall revenue projection for this year is 12.7 billion quote. That figure implies the ChatGPT maker is generating $1 billion a month, compared to about $500 million a month at the start of the year. The growth comes as the company logs roughly 700 million weekly active users for its ChatGPT products used by both consumers and business customers, up from 500 million weekly active users OpenAI said all of its products had in late March. The revenue progress suggests the company could beat its projection of $12.7 billion in revenue for the year, up from around $4 billion in 2024, as more enterprises and individuals subscribe to its Chatbot for coding and other tasks. The fast growth is coming at a cost, however. OpenAI has increased its CA projection to roughly $8 billion in 2025, up $1 billion from the cash burn it projected earlier in the year, according to the same person. That suggests it could raise its earlier projection of $14 billion in spending on running servers to power its technology in 2025. The booming growth, which rivals such as Anthropic are also experiencing, appears to be helping OpenAI finalize commitments to an unprecedented $40 billion in funding at a pre money valuation of $260 billion, five months ahead of the schedule set by lead investor SoftBank in April. In a push to get more Enterprises to buy ChatGPT subscriptions, OpenAI is selling a customized version of its ChatGPT deep research feature, which produces full fledged reports and has offered 10 to 20% discounts on its ChatGPT for Enterprises product when customers buy tools like these. This month, it also released features for ChatGPT subscribers to create and edit spreadsheets and presentations, which could heighten its competition with Microsoft and Google. Anthropic previously told investors it will burn $3 billion this year after burning $5.6 billion last year, and it projected rapid growth to as high as $12 billion in revenue in 2026 on the strength of its market leading AI for coding related tasks. End quote According to a stack overflow survey, 84% of developers use or plan to use AI tools in their workflow, up from 76% last year. But what I found most interesting is that 33% reported that they trust AI accuracy. So that means that trust is down from 43% reporting trust in 2024. Quoting VentureBeat the 2025 survey of over 49,000 developers across 177 countries reveals a troubling paradox in enterprise AI adoption. AI usage continues climbing, yet trust in these tools has cratered. One of the most surprising findings was a significant shift in developer preferences for AI compared to previous years. While most developers use AI, they like it less and trust it less this year, aaron Yeppes, senior analyst for market research and insights at stack overflow, told VentureBeat. This response is surprising because with all of the investment in and focus on AI and tech news, I would expect that the trust would grow as the technology gets better. The numbers tell the story. Only 33% of developers trust AI accuracy in 2025, down from 43% in 2024 and 40 42% in 2023. AI favorability dropped from 77% in 2023 to 72% last year to just 60% this year. But the survey data reveals a more urgent concern for technical decision makers. Developers cite AI solutions that are almost right but not quite as their top frustration 66% report this problem. Meanwhile, 45% say debugging AI generated code takes more time than expected. AI tools promise productivity gains, but may actually create new categories of technical debt. AI tools don't just produce obviously broken code. They generate plausible solutions that require significant developer intervention to become production ready. This creates a particularly insidious productivity problem. AI tools seem to have a universal promise of saving time and increasing productivity. But developers are spending time addressing the unintended breakdowns in the workflow caused by AI, Yepes explained. Most developers say AI tools do not address complexity. Only 29% believe AI tools could handle complex problems this year, down from 35% last year. Unlike obviously broken code that developers quickly identify and discard, almost write solutions demand careful analysis. Developers must understand what's wrong and how to fix it. Many report it would be faster to write the code from scratch than to debug and correct AI generated solutions. The workflow disruption extends beyond individual coding tasks, the survey found 54% of developers use six or more tools to complete their jobs. This adds context. Switching overhead to an already complex development process and rapid AI adoption has outpaced enterprise governance capabilities. Organizations now face potential security and technical debt risks they hadn't fully addressed. Vibe coding requires a higher level of trust in the AI's output and sacrifices confidence and potential security concerns in the code for a faster turnaround, ben Matthews, senior director of engineering at Stack Overflow, told Benterbeat. Developers largely reject Vibe coding for professional work, with 77% noting that it's not part of their professional development process. Yet the survey reveals gaps in how enterprises manage AI generated code quality. Security risks compound these quality issues. The survey data shows that when developers would still turn to humans for coding help, 61.7% cite ethical or security concerns about code as a key reason. This suggests that AI tools introduce integration challenges around data access, performance and security that organizations are still learning to manage. End quote finally today, Google DeepMind has unveiled alpha Earth Foundations, an AI model that unifies petabytes of Earth observation data and helps scientists create detailed maps on demand. Quoting VentureBeat, the system addresses a critical challenge that has plagued Earth observation for decades, making sense of the overwhelming flood of satellite data streaming down from space every day. Satellites capture terabytes of images and measurements, but connecting these disparate data sets into actionable intelligence has remained frustratingly difficult. Alpha Earth Foundation's functions like a virtual satellite, the research team writes in their paper. It accurately and efficiently characterizes the planet's entire terrestrial land and coastal waters. By integrating huge amounts of Earth data into a unified digital representation, the AI system reduces error rates by approximately 23.9% compared to existing approaches, while requiring 16 times less storage space than other AI systems. This combination of accuracy and efficiency could dramatically lower the cost of planetary scale environmental analysis. The core innovation lies in how Alpha Earth Foundations processes information. Rather than treating each satellite image as a separate piece of data, the system creates what researchers call embedding highly compress summaries that capture the essential characteristics of Earth's surface in 10 meter squares. The system's key innovation is its ability to create a highly compact summary for each square, the research team explains. These summaries require 16 times less storage space than those produced by other AI systems that we tested and dramatically reduces the cost of planetary scale analysis. This compression doesn't sacrifice detail. The system maintains what the researchers describe as sharp as sharp 10x10 meter precision while tracking changes over time for context. That resolution allows organizations to monitor individual city blocks, small agricultural fields, or patches of forest critical for applications ranging from urban planning to conservation. End quote. Okay, here's that big podcast news for ya. I have accepted a $200 million offer to join Meta's AI team. Just kidding, of course. Though if you're listening Mark Zuckerberg, I'd be fine with a mere $10 million. I'm not picky like that. Credit Chris Messina for that joke. No, here's the real news. Beginning with tomorrow's episode. This podcast is now going to be the Tech Brew Ride Home Podcast. I am joining the team at Morning Brew, and that's basically the long and short of it. Absolutely nothing else is gonna change. The format of the show will be exactly the same. The content will be the same, the music will be the same. I still have editorial control over everything. All that will change tomorrow will be the show artwork, the name of the show, and your podcatcher. And at the start of the show, instead of saying welcome to the TechMe Ride Home podcast, I will say welcome to the Tech Brew Ride Home Podcast. Why is this change happening? Well, after more than seven years, I think I've been exposed to about as much of the audience of the techmeme brand as possible. So in search of reaching new listeners, I made a deal with the good folks over at Morning Brew to be exposed to their audience and hopefully get new listeners so the show can continue on for years to come. I still love all the good folks at techmeme. I'm still personal friends with Gabe Rivera. I am truly grateful for all of the support he and techmeme gave us over the years and the solid partnership that made this show possible in the first place. And I want to thank all the good people at Morning Brew for being amazing partners so far. It's quite something to have the resources of a major media company behind me for the first time in my podcasting career. If you notice any other changes around here, those might include a higher class of sponsors, hopefully, and maybe a higher tier of interview guests for weekend bonus episodes because I have access to an actual studio for the first time. So hopefully you'll be impressed with who I sit down with in person in the coming months to interview. Anywho, tomorrow Tech Brew Ride Home Podcast, you won't have to do anything. The switchover will just happen. And if I get the name wrong a few times in the coming weeks, let me know. You know, still writing 2024 on your check style. Please forgive me. I've said tech meme ride home at the beginning of an episode for more than 2100 episodes now. So, you know, habits can be hard to break. Talk to you tomorrow.