Combined CFO $557B vs capex $360B and capital returns $129B, with $427B cash on balance sheets and D/E between 0.12x and 0.27x. CFO comfortably covers capex + buybacks + dividends. The open question is ROI, not fundability. The bet is that AI capex feeds cloud (50-60% gross margins), and Google’s just-released Q1 2026 numbers are an early datapoint that the flywheel is showing up: Google Cloud revenue $20.0B, up 63% YoY, with operating income tripling from $2.2B to $6.6B. Cloud backlog nearly doubled QoQ to over $460B, and Pichai called out enterprise AI solutions as the primary growth driver for the first time. If that pattern holds across hyperscalers, the capex pays for itself many times over. If it stalls, capex plans get cut. That is the signal to watch.
On the LLM-dead-end video (Vivek_Shetty): Worth being precise. The video isn’t saying LLMs don’t work, it’s saying LLMs can’t lead to AGI. Different claims, and the AGI one is irrelevant to whether IT services get disrupted. The Sikka paper it references only shows an LLM can do a bounded amount of computation per forward pass; that’s nearly trivial and says nothing about chain-of-thought, which is where frontier models are now. Current LLM capability is already enough to disrupt parts of the IT services value chain, AGI or not.
Yes, they will be disrupted the same way YouTube disrupted traditional TV/News/Movies. It will democratize code and level the playing field.
Complex projects / movies are still mainly done by bigwigs, while the tasks that are lower in value chain is up for grabs, its gonna be a brutal pricing war in that segment. Overall it’s gonna be like 2000s again, the companies adapt and reinvent themselves will thrive.
Unfortunately we’re not partying like it’s 1999 when it comes to stock prices.
Couple of days ago, an AWS executive publicly called out the views of Infosys co-founders Nandan Nilekani and Narayana Murthy “outdated” — arguing that their incremental, services-first mindset could push India “into a ditch” in the 21st century. Instead, he says the country needs “more Vishal Sikkas” and leaders willing to bet on building powerful, homegrown AI models.
I would tend to agree. Ruchir Sharma has also mentioned that, India has already lost AI innovation in comparison to USA and China and only building data centers and AI based applications, and Need to innovate rapidly.
Next century may not reward only hard work but it will reward smart innovation and out-of-the-box thinking, and our IT leaders are still only taking small steps. At national level, only large population will not able to take economy forward, but “Science based innovation” is needed.
Only building hardware, to me, is not necessarily moving forward.
I may be wrong in my analysis. (ex IT professional).
Anthropic announced today that they are launching their own AI services company to help deploy AI in companies, i.e. compete directly with traditional IT service providers. They claim that this is focused on smaller firms and large IT consulting companies will serve the enterprise, but every SMB software business goes after mid market and enterprise customers eventually. How is this not massively bearish for IT services?
Why we’re building this
Putting Claude to work in an organization’s core operations takes hands-on engineering and deep familiarity with how each business runs. Systems integrators in the Claude Partner Network lead that work for the world’s largest enterprises today, and we are continuing to invest deeply in those partnerships as Claude reaches more customers. This new firm extends that delivery capacity further. Companies from community banks to mid-sized manufacturers and regional health systems stand to gain from AI, but lack the in-house resources to build and run frontier deployments.
“Enterprise demand for Claude is significantly outpacing any single delivery model. Our partnerships with the world’s leading systems integrators are central to how Claude reaches large enterprises,” said Krishna Rao, Chief Financial Officer of Anthropic. “This new firm brings additional operating capability to the ecosystem and capital from leading alternative asset managers. We are proud to build it alongside Blackstone, Hellman & Friedman, Goldman Sachs, and our other partners.”
