Back to our Regularly Scheduled Programming: an update on AI capabilities, corporate AI adoption and hyperscaler AI revenues vs spending

With some kind of tariff equilibrium possibly within reach, we return to some regularly scheduled programming: artificial intelligence and language models which were the primary drivers of equity markets before the trade wars began. To be clear, our estimate of the US bilateral tariff rate on China would still be ~40% after incorporating all the individual pieces announced so far. But with some tariff clarity, markets may be able to refocus on other things. That’s what companies are doing: they focused a lot more on AI than tariffs in Q1 earnings calls. This note covers massive hyperscaler AI spending, the improving capabilities of AI reasoning models, increased signs of corporate AI adoption and the scavenger hunt for growth in hyperscaler AI related revenues.

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