Episode summary
Big Tech AI Blowout and Fed Dissent | Bloomberg Surveillance
Bloomberg Surveillance
· · 38 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Angelo Zino, Jonathan Golub, Ed Hirs, Sophia Drossos
Summary
The discussion centered on whether the latest big-tech earnings and forecasts mark the beginning of a longer AI capital-spending boom or the point at which investors should start worrying about returns. One guest argued that the depreciation profile on data-center and server spending is manageable, with many assets depreciating over roughly 5 1/2 to 6 years on average, and said the current wave of capex does not look like artificial earnings inflation. He also said Alphabet appears to have the clearest monetization story, while Meta’s larger spend drew a worse market reaction because investors still do not have a clear path from AI outlays to future products and revenue.
Key takeaways
- A guest said the big AI capex cycle is still early and could run longer, with 2027 spending likely higher than 2026 at some hyperscalers.
- A guest argued Alphabet has the clearest AI spending visibility, while Meta’s story is weaker because investors still lack a clear monetization path.
- A guest said AI semiconductors remain the strongest part of the market, with predicted earnings growth near 99% year over year versus about 2% for hyperscalers.
- Another guest said stocks care more about credit spreads and downside risk than the short rate, so Powell staying put is less important than many investors think.
- An energy guest said the Strait of Hormuz disruption and wider Middle East conflict could keep oil tight, while Texas producers are leaning more toward gas and hedged production.
Notable quotes
“I think it depends, right? On you know, the actual asset we're talking about and and realistically it could be anywhere from 3 to 15 years in many respects”
“I think the good thing for meta at least at this point in time is when you look at the growth rate, 33% this quarter, you know, another 25% year over year next quarter”
“It is it is. It really is. In fact, I'll take it a step further. Let's let's contextualize this as a percentage of GDP”
“We've done a bunch of work on what stocks care about. They care about credit spreads because that really represents the downside tail risk”
How the episode opens
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Listen on demand wherever you get your podcasts or watch us live on YouTube. Angelo Zino with a CFRA research on technology. Angelo, Paul's been preparing all morning smart questions.
Let me ask you the question, do we understand the depreciation trail of all this CapEx? Is it 6 months or is it 6 years? Um so Tom, and thanks for having me.
So I think it depends, right? On you know, the actual asset we're talking about and and realistically it could be anywhere from 3 to 15 years in many respects. But on average when you're depreciating most of these assets you're talking about 5 and 1/2, 6 years is the average, you know, depreciation depreciating time for these assets, you know, these servers and what have you, which is you know, where most of the CapEx dollars go into.
Obviously if we start talking about the land and what have you, you're you're looking closer to a 15-year time horizon. But when you start thinking about you know, some of the concerns out there about depreciation and you know, whether or not we're properly you know, properly accounting for earnings and what have you, I'd say at this point in time you know, things look pretty good in the sense that you know, all the CapEx that's been spent, you can go back to you know, the these legacy type of GPUs that are out there. Pricing still remains very firm.
So from a a depreciation perspective, it's not as if you know, we're inflating the earnings at least at this point in time.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- big tech earnings
- ai spending
- fed dissent
- us economic outlook
- energy markets
Companies and tickers mentioned
- AAPL
- Apple
- Point72
- Seaport Advisors
- CFRA Research
Watch the episode
Watch “Big Tech AI Blowout and Fed Dissent | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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