For the past few quarter, capex figures and related comments from hyperscalers are the key metrics to watch, especially for gauging future demand for semiconductor companies.
The higher the capex number, the higher the revenue estimates.
This worked but became less useful lately.
Investors don’t like it if only the capex is growing, which pushes hyperscalers free cash flows to negative territory.
Investors want to see higher demand signal, which can justify these higher capex numbers.
Thus, backlogs or RPOs (emaining performance obligations) are more important now.
| Quarter | AWS backlog | Microsoft commercial RPO | Google Cloud backlog | Oracle total RPO |
|---|---|---|---|---|
| 1Q25 | 189 | 315 | 90 | 130 |
| 2Q25 | 195 | 368 | 106 | 138 |
| 3Q25 | 200 | 392 | 155 | 455 |
| 4Q25 | 244 | 625 | 240 | 523 |
| 1Q26 | 364 | 627 | 462 | 553 |
| 2Q26 | 496 | 678 | 514 | 638 |
Another thing to watch is the weighted-average backlog duration of these backlogs – within how many years will backlog become revenue?
Microsoft explicitly commented about 2.3 years.
RPO, including OpenAI, has a weighted average duration of 2.3 years. And roughly 30% will be recognized in revenue in the next 12 months, up 37% year-over-year. The remaining portion recognized beyond the next 12 months increased 112%.
In addition, utilization is also an indicator.
Amazon said “lion’s share” of AWS compute capacity for 2027 had already been reserved during 2q26 earning call, which is very good to hear.