Episode summary
Alphabet to Blow Past Investor Expectations for AI Spending | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 38 min · Hosts: Carol Massar, Tim Stenovec · Guests: Mandeep Singh, Dan Ives, Jennifer Welch, Axel Merk
Summary
Alphabet’s fourth-quarter results beat expectations, but the bigger story was its 2026 capital spending guide: $175 billion to $185 billion versus the $119.5 billion analysts expected. The market initially punished the stock, then reversed as investors digested how aggressively the company is building AI infrastructure. The host and analysts argued that the spending reflects an accelerating AI arms race rather than a sign of distress, especially because Alphabet can monetize that investment through Google Cloud and search.
The analysts said Alphabet’s AI efforts are already showing up in the numbers, citing stronger search usage, a 750 million Gemini app monthly active user base, and cloud revenue of $17.66 billion for the quarter. They argued that Google’s vertical integration, including its own chips and AI stack, gives it an advantage over peers that are buying more capacity from outside vendors. They also pointed to Apple’s reported use of Google chips as evidence that Alphabet’s infrastructure has real external demand.
Later, the conversation broadened to Qualcomm’s weak outlook, the still-early state of AI monetization across software, and the view that the market is separating winners and losers more sharply. A second segment shifted away from tech into macro, with Jenny Welch discussing President Trump’s call with President Xi, rising US-China tensions, and the strategic uncertainty around Iran, Russia, and critical minerals.
Key takeaways
- Alphabet said it will spend $175 billion to $185 billion in 2026, far above the $119.5 billion analysts expected, and the analysts called that a sign of the AI buildout accelerating.
- The analysts said Google Cloud and search are helping justify the capex because Alphabet can monetize the infrastructure instead of using it only internally.
- Mandep Singh said Gemini app monthly active users reached 750 million, and he tied that growth to AI usage across Google’s products.
- Dan Ives said the market’s initial selloff was a knee-jerk reaction and argued the AI spending and monetization story is still intact across hyperscalers.
- The host and guests said Qualcomm’s weaker forecast reinforces a stock-picker market where data-center exposure matters more than handset demand.
- Jenny Welch said Trump’s call with Xi reflected broader US-China tensions over Iran, Russia, and the global order, not just trade.
Notable quotes
“The company said it will spend 175 billion to 185 billion this year. That's the headline”
“I think it's just further I think solidifies what's happened in this AI revolution”
“It's a stock picker market and it's one where I think you hit on it before when you mand you're you're now starting to see separation in different pockets”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio. Alphabet shares which were down 1 2% now up about
Down as much as 7 and a half%. — All right. Right. At its low. Sorry, that was the last trade. But now they're up actually more than 2% here. So quite a swing back to the upside here. — Okay. The company said it will spend 175 billion to 185 billion this year. That's the headline. Compared with the 119 billion that analysts expected, fourth quarter sales for Alphabet, excluding those traffic acquisition costs, those partner payouts, 97.23 billion. It surpassed 92 95.2 billion expected on average by analysts. I want to bring in Bloomberg Intelligence, senior global head of
Going through the numbers as we speak. — I saw him running into the studio. He's here in our Bloomberg Interactive Brokers studio. We have so many questions for you. First, I just want to start with the capex. This number is so much bigger than analysts thought they would see. We're talking 175 billion to 185 billion in 2026. 119.5 billion was expected. Why?
Well, uh, and and when you think about the year-over-year growth rate for 2026, we're talking about almost a doubling of the capex. They were around 95 billion for 2025. So, at the high end, we are uh, you know, talking about doubling. Look,
That's huge. after — They thought 2025 was a big year. — No. And after the meta print, it became obvious that these companies are going to step up in terms of their capex spend.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai spending
- alphabet earnings
- google cloud revenue
- ai chips infrastructure
- us china tensions
Companies and tickers mentioned
- GOOGL
- GOOG
- AAPL
- Alphabet Inc.
- Apple Inc.
- Wedbush Securities
- Merk Investments
- OpenAI
- Anthropic
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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