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I think this could go longer than one quarter. If memory prices remain high, or if the year on, uh, war stuff is not resolved soon. Because what typically happens in enterprise IT budgets is when you see times of uncertainty, companies hold back on their discretionary spending and only spend on things that are absolutely critical to them. And this is where all of those things I think, um, joined together and, you know, created this big issue for IBM today.
Is this a case of tech companies deferring budgets for anything that's not AI related? And if you don't, and you know, we're going to see this across a number of companies. Is that what's happening here? I think absolutely right. In that case, and not just AI, it's actually hardware purchases. So if you have to update your servers, storage devices, etc., they're going to get more expensive next quarter. So you're going to divert all those funding because remember, memory prices are just rising. So what happened in the case of IBM? Their customers were basically saying that if we have to buy servers, we got to do it now because next quarter they're going to get more expensive. So all that funding got diverted. So that is one big area. So they may be related to AI, and they may not be, but it doesn't matter. You're buying more hardware today at the expense of other areas. So bad for IBM here today.
What's the read across here on Oracle? I think it's going to be the same story, whether it's SAP, ServiceNow, Salesforce, Workday, etc., all of them. Because what's going to happen is companies are going to scale back on subscriptions for those products and wait and buy more hardware so that they can allocate their budgets. And now, the fun part is going to be, people are going to think that their subscription sales growth is because of a disruption, and that hurts valuations even more.
Uh, there's a movie in Oracle. I don't know if you watched it as a kid, Mary Poppins, where Admiral Blow's weather vane turns my weather vane on your world is the Amazon debt. This is about five, oh, 50 years. The Amazon 6% of 76. It's plunged in price. It's gone from 99 down under 95. What does that signal to you to see Amazon debt price down, yield up?
I think Microsoft and Amazon really need to go out and explain to the market when they report of why they are spending so much on AI. Right now, you know, I understand the thesis. I mean, we know it very well. But at the same time, if the market is telling them, if Microsoft's valuation is down 40%, the CEO needs to come and explain what's the ROI on all that 190 billion that he's going to spend. And the same applies for Amazon. I think Amazon is slightly better positioned because of its own chips. But Microsoft has to do a lot more explaining right now. Pull Microsoft 391 down to 381, down about $10. Yeah. Just amazing.
Uh, ASML, TSMC, the two largest chip makers in the world. We're going to hear earnings from them. Are people going to be just asking them when can you guys make more chips? Is that going to be the solution? Yeah. This is where, when can you go out and supply? What has happened in the last three years is so much of free cash flow has shifted from all things software to all of chip and hardware related stuff, and we don't see any signs of that slowing down in the near term. On top of that, cloud providers have to spend so much more on memory. Microsoft said they're going to spend $25 billion more this year on memory. Now, that number is going to climb because they gave that number back in April, and since then, memory prices are up again.
And around, what is Neo Cloud? It's just a differential that this is a cloud that came up with only to do AI infrastructure spending. So that's either CodeWeave or NetApp. Now, when you look at your traditional cloud provider, which is Amazon or Microsoft, they are more CPU-based cloud providers. By the Neo clouds are mostly just GPU-based stuff, and most of them are just simply selling Nvidia chips to people. Not chips, but chips as a service or GPU as a service. So what are the CPU guys going to do if they're forced to go GPU? I mean, that's the worry, right? But that's where all the money is going. So Amazon and Microsoft are buying most of their their CapEx is going towards buying those GPUs so they can offer both things. Now, the advantage in the case of both Amazon and Microsoft is they have that CPU business, that bringing lots of that free cash flow so that they can deploy for GPU related work. In the case of the Neo cloud, they're getting funding right now. There is, there is no doubt about it. But if we ever ran into a space when liquidity dries up, then they will have bigger issues than the likes of Amazon or Microsoft.