www.groundbrkr.com/p/the-teaser-period-why-the-ai-boom
1 correction found
More than $2.3 trillion of compute contracts now sit on the books of the four largest American cloud providers as remaining performance obligations and contracted backlog - signed, celebrated, capitalized into equity prices, and, critically, not yet billing.
Public RPO/backlog figures are not reported as AI-compute-only contracts, and they are not all 'not yet billing.' Company filings say these balances include broader cloud/commercial services and already-billed deferred or unearned revenue.
Full reasoning
This sentence misstates what the companies actually report.
1) The reported balances are not disclosed as AI-compute-only contracts.
- Alphabet says its $519.5 billion of remaining performance obligations is "revenue backlog", with $513.9 billion related to Google Cloud broadly—not specifically AI compute.
- Amazon says its long-dated commitments are "primarily related to AWS" future services, again broader than AI compute.
- Microsoft reports company/commercial RPO across its commercial products and cloud services, not a compute-only bucket.
2) RPO/backlog is not synonymous with 'not yet billing.'
- Microsoft's filing says RPO includes unearned revenue, i.e. amounts already billed/collected in advance, plus amounts expected to be invoiced later.
- Oracle's filing likewise says RPO includes deferred revenues and invoices that have been issued to customers but were uncollected.
- Amazon separately says unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships.
So the public filings do not support describing these balances as $2.3 trillion of compute contracts that are all "not yet billing." They are broader contract backlogs, and they include already-billed deferred/unearned revenue as well as future billings.
4 sources
- Microsoft Form 10-Q (quarter ended March 31, 2026)
Revenue allocated to remaining performance obligations, which includes unearned revenue and amounts expected to be invoiced and recognized as revenue in future periods, was $633 billion as of March 31, 2026.
- Oracle Form 10-K (fiscal year ended May 31, 2026)
Remaining performance obligations represent contracted revenues that had not yet been recognized, and include deferred revenues; invoices that have been issued to customers but were uncollected and have not been recognized as revenues; and amounts that will be invoiced and recognized as revenues in future periods.
- Amazon Form 10-Q (quarter ended March 31, 2026)
Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services...
- Alphabet Form 10-Q (quarter ended June 30, 2026)
As of June 30, 2026, we had $519.5 billion of remaining performance obligations (“revenue backlog”), of which $513.9 billion related to Google Cloud.