Inferential

Anthropic committed $200 billion to Google Cloud last week — five gigawatts of TPU capacity over five years, beginning in 2027 — first reported by The Information on May 5. The contract represents roughly 40% of Alphabet’s $462 billion cloud backlog disclosed at Q1 earnings. Alphabet shares are up about 160% over the past twelve months and briefly passed Nvidia in after-hours market cap the day the report ran. Wall Street read the news as confirmation that “owning the stack” — chips, models, distribution — is the durable AI position. ...

The model-layer commoditisation that broke into public view at the end of April kept compounding through this week’s earnings calls. Two CTO-level confirmations on different stages put GPT-4-equivalent inference at roughly one-thousandth its early-2023 cost. The released value did not disperse evenly. It flowed up the stack to vendors with proprietary context above the models, and crashed down on vendors whose own labour cost was sitting in the path AI was busy automating. Three Inferential daily posts and four more market events between May 1 and May 7 located the same line, drawn from the same mechanism, with vendors landing on opposite sides of it. ...

On Monday May 4, SAP did three things in a single press cycle. It announced the acquisition of Dremio, an open data lakehouse built on Iceberg. It announced a €1 billion investment over four years to acquire Prior Labs, an 18-month-old German AI lab whose TabPFN tabular foundation model has been downloaded over three million times. And it confirmed that SAP “prohibits” unauthorized AI agents from accessing its products through its API — only SAP-endorsed agent architectures, namely Joule Agents and NVIDIA’s NemoClaw, are permitted on the platform. ...

Palantir reported Q1 2026 revenue of $1.633 billion on Monday, up 85% year over year and 16% sequentially — its fastest growth since the 2020 direct listing. U.S. revenue hit $1.282 billion (+104% YoY); U.S. commercial revenue alone reached $595 million (+133%). The company raised FY26 revenue guidance to $7.65–7.66 billion (+71%) and U.S. commercial to “in excess of $3.224 billion” (+120%). The stock entered the print down about 18% year to date. ...

Atlassian’s stock jumped roughly 30% on Friday May 1 after the company reported Q3 FY26 revenue of $1.79 billion, up 32% year over year, against a sell-side estimate of $1.69 billion. Adjusted EPS of $1.75 beat the $1.32 consensus by 33%. Cloud revenue grew 29% to $1.13 billion. Data Center revenue hit $561 million versus an expected $515 million. Full-year cloud and data-center guidance was raised. Going into the print, the stock was down about 45% year to date and 84% off its 2021 peak. ...

On Monday April 27, Microsoft announced that OpenAI would no longer ship products exclusively on Azure. The exclusivity arrangement — the financial spine of the 2019 deal that defined Microsoft’s AI strategy — lasted six years and nine months. The next morning, AWS shipped GPT-5.5, GPT-5.4, OpenAI Codex, and Bedrock Managed Agents into limited preview. Less than 24 hours after the lock came off, the same models were running on a competitor’s cloud. ...

Bill McDermott raised ServiceNow’s 2026 AI revenue target from $1 billion to $1.5 billion mid-call on Tuesday. Now Assist customers spending more than $1 million a year grew 130% year over year. Sixteen deals worth $5 million or more in net new annual contract value closed in the quarter, up roughly 80%. Subscription revenue grew 22%. The stock fell about 17% the next day. Goldman cut its target from $188 to $163; Jefferies from $175 to $135; Piper Sandler from $200 to $140. ...

On Thursday, April 23, Meta cut 8,000 jobs and Microsoft offered buyouts to roughly 8,750 more. Both cited AI. Neither was losing money. Microsoft’s program is the first voluntary buyout in its 51-year history, eligibility set by a “rule of 70” — age plus tenure must reach seventy, capped at senior director level, with notifications going out May 7. Meta’s chief people officer Janelle Gale told staff in a memo obtained by Bloomberg that the cuts are “to offset the other investments we’re making.” Severance is 16 weeks plus two per year of service; effective date May 20. The company is also closing 6,000 unfilled roles, removing 14,000 headcount positions from its 2026 plan. ...

SAP reported Q1 2026 cloud revenue of €5.96 billion, up 27% at constant currencies, with a current cloud backlog of €21.9 billion — also up 25% CC. Non-IFRS operating profit rose 24% CC. Five weeks earlier, CEO Christian Klein had called subscription pricing “foolish”, because AI would automate the tasks seat licenses charge for. Both statements are true, and that is the interesting part. The Q1 print is the strongest case for hypothesis falsification since this blog opened — a legacy ERP vendor growing cloud revenue at a pace well above the market while pivoting, out loud, to consumption pricing. Cloud gross margin held flat at 74.6%. Business AI was reportedly in two-thirds of Q4 cloud orders and in 90% of the fifty largest deals. Daimler Truck North America cited 4x higher bid win rates. Bosch Digital equipped 1,500 developers with SAP’s AI tooling for the ERP migration. This does not look like erosion. ...

This week, four posts on this blog and four stories outside it pointed at the same thing from different directions: enterprise software vendors are running their old pricing models and their new ones side by side — the old one still carrying the P&L, the new one absorbing the press releases. Nobody has switched off the old engine. Almost everyone has started the new one. And the productivity story that’s supposed to justify the whole transition isn’t fully showing up in the data yet. ...