If inquisitive investors wanted to measure the demand for AI with some actual numbers, one place they might look on the balance sheet is the line reading “remaining performance obligations,” known more simply as the backlog.

The number reflects the total dollar value of contracts signed with customers for cloud computing that has not yet been delivered. This might be because the company doesn’t have the necessary capacity to fulfill it, or the client doesn’t need it yet (but has promised to buy it), or some other opaque combination of factors. It exists as a guide for investors to model potential revenue and for the companies themselves to plan (and justify) their enormous capital expenditures — albeit an imperfect one that raises questions for both sides.

© Bloomberg