These assets are expected to be useful for years, so the cost is not treated as an ordinary expense in the year it is paid. It is recorded as an asset and then spread over its useful life through depreciation. Cloud and AI companies show large CapEx figures because they keep building data centers and buying chips and networking gear.
CapEx tells you where a company is investing for the future. A sharp rise can mean the company expects strong demand. It also reduces free cash flow in the short term, because the cash leaves now while the revenue it supports arrives later.
The risk is that spending runs ahead of demand. If the new capacity is not used, the company carries the cost of idle assets and rising depreciation, which can pull down profit.
When you read a report, compare CapEx with revenue and with operating cash flow, look at what the company says the spending is for, and check whether past investments have produced growth.