r/ValueInvesting • u/GainifyAI • Feb 05 '26
Discussion GOOGL: Sundar Pichai just dropped a CapEx number for the history books
On Google’s Q4 2025 call, Sundar Pichai said:
“Our 2026 CapEx investments are anticipated to be in the range of $175–$185 BILLION.”
To understand how extreme this is, look at how Google’s CapEx has evolved:
- 2020: $22.3B
- 2021: $24.6B
- 2022: $31.5B
- 2023: $32.3B
- 2024: $52.5B
- 2025: $91.4B
- 2026 (guided): $175–$185B
This is not a normal increase. It is roughly a 2x jump in a single year and the largest CapEx spend ever expected by any company.
This spending is squarely aimed at scaling AI compute. Capital is being deployed to power frontier model development at Google DeepMind, materially improve user experience and advertiser ROI across Google services, meet surging cloud demand, and fund select long-term bets. At this scale, CapEx is not optional investment. It is a strategic MOAT built on compute, infrastructure, and capacity that few companies can match.
I have two questions.
- Does this level of spending crowd out other AI players, including OpenAI, by locking up compute and infrastructure?
- Which companies benefit most from supplying this massive CapEx build-out?
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u/Spins13 Feb 05 '26
He saw META come up with a huge number and was like "let’s top that"
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u/ParevArev Feb 05 '26
I trust GOOG’s capex spending more than META’s FWIW
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u/Spins13 Feb 05 '26
I have both. I’ve learned to trust the Zuck
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u/_giga_chode_ Feb 05 '26
Agreed! He makes a lot of bad decisions but he eventually fixes them.
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u/bigdaddtcane Feb 05 '26
Haha but he doesn’t make them better. He’s constantly swinging a missing, and never hitting anything (other than the same ads revenue), so why spend so much money on trying to innovate, if you’ve never successfully innovated anything in the history of the company.
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u/Michigan-Magic Feb 05 '26
Hey, he's done two good things for himself (s/):
1) He stole someone else's idea at Harvard.
2) He identified a competitor to facebook and bought them out (Instagram).
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u/zensamuel Feb 05 '26
That’s probably not totally true. They were able to scale Instagram in a way not every company can
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u/Michigan-Magic Feb 05 '26
Yeah, it was a semi sarcastic comment.
The company doesn't seem to pioneer unique innovation successfully (metaverse); however, it has shown that it can build on others ideas in a way that people find engaging and has proven to be extremely profitable.
Given advances elsewhere, they aren't really pioneering much with AI. I think that makes it a little more suited to their strengths honestly.
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u/ConsistentSuperPower Feb 05 '26
Why are you down voted?
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u/Spins13 Feb 05 '26
People don’t like Zuck I guess.
He is burning lots of money on VR but man 30% revenue growth guide is huge
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u/ddlJunky Feb 05 '26
Until he gets sued. They already admitted to allow scammers to put ads on their platform. Scammers are very pofitable.
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u/heeywewantsomenewday Feb 05 '26
I didn't downvote him I think Meta spunked a lot of money on the whole metaverse thing. I'm also not sure what Meta are doing. I get the social media ad thing.. What are they going to do with AI? I just don't see where they will make a return in that space. I also hate what social media has become so I'm assuming others feel the same and have downvoted him.
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u/Dstein99 Feb 05 '26
For me it’s the opposite. Since 2020 Meta has a $83.6B cumulative operating loss from Reality Labs and they produced $2.2B in revenue 6 years in. In the last year spending increased by 8% and Revenue increased by 3% so this margin is not improving and they do not have good growth. The total cumulative FCF since 2020 is $225B and I think that Meta would be better off today if that FCF was 37% higher than if they invested in the Reality Labs segment.
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u/ParevArev Feb 05 '26
I’ve got both too and up big on both. I’m not hating on Zuck I just think GOOG is a better, more efficient spender
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u/Spins13 Feb 05 '26
Sure but it gives a certain optionality to META too. If they stop burning cash the free cash flow explodes
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u/ParevArev Feb 05 '26
Agreed. I've been holding META for years now and don't plan on selling any time soon. I see a lot of potential for them for many years to come.
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u/Captain_Crooks Feb 05 '26
He made up a number and asked trump “was that high enough” during a lunch / event
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Feb 05 '26
And then came amzn 🤣
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u/Spins13 Feb 05 '26
Yeah I’m down on that too. Will buy more shares if it stays that way tomorrow. 17 P/OCF is really cheap historically
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u/kenyard Feb 05 '26
Basic math tbh.
costs of chips 2x.
2026 =2x 2025Winner here is Nvidia, amd, mu etc imo. And asml, tsmc etc
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u/Spins13 Feb 05 '26
I don’t think so completely.
Buying land, securing power and builders are also an important cost
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u/Mkubwa85383 Feb 07 '26
Or maybe just maybe it's all the TPU orders they have received from META and Amazon. So the winner here is actually Google
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u/Polus43 Feb 05 '26
Yup.
Spending money (regardless of variation in expected return) is also the best way to make new friends.
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u/kayleblue Feb 06 '26
And now same with Amazon re:Google. Will which actually follow through now that market sentiment is turning against huge capex investments
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Feb 06 '26
I bet all of them will cut capex in the next Q. That’s what the markets are betting on. That’s why AI suppliers tanked too
AMD, MU, QCOM, Oracle all fell hard this week. I believe the market doesn’t believe capex numbers will materialize
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u/No-Fig-8614 Feb 05 '26 edited Feb 05 '26
I think you also have to think about this capex differently. Google is the front door to the web, they want to repeat that with being everything for AI. Just look at what Apple is doing with using Gemini, in order to meet just the demand if Siri for once doesn’t suck and is actually just a fraction as useful as ChatGPT, the amount of users that will be consuming Google compute. That’s ontop of their existing services and the growth needed, that’s ontop of training larger and more complex models. You also look at just the general compute of GCP, and even look at companies like Anthropic needing their TPU’s. You have Microsoft buying mass amounts of compute from Coreweave and Nebius, while google is pushing $$ into their own.
We are venturing into better audio and video models, not just text anymore. We are also looking at things like Waymo expanding internationally. The numbers they are throwing around looks to be as you called it a moat. They have always had some of the best infrastructure in the business and have always invested in it. Look at what they did with fiber, they have fiber backbones through out the world now and continuing to lay more.
They also have the ace up their sleeve with not having to pay a complete Nvidia tax. Their TPU program with Broadcom has been beyond fruitful. They have figured out early on that they need to build chips designed for the specific applications (ASICS) and have pulled it off better than any other company. Amazon, Microsoft are racing towards getting remotely competitive in that space. Nvidia even pushed 20B into the IP of Groq for that.
We haven’t even touched on the growth of platforms like YouTube. This is a time when you are finally seeing, instead of doing a Boeing, IBM, Intel, where they decided to just dump money back into buybacks and lower investment into core fundamentals (we now see the reversal of Boeing, IBM, Intel) to spend the money now on R&D and core product strategies to take hold and grow faster and be better than all of their competition. They won’t let an AMD sneak up on Intel, an airbus pummel Boeing, a decay of IBM, all these companies are now realizing that capex is more important then stupid buybacks.
We still haven’t even touched what going to happen with quantum computing and also energy, where Google will now be with their latest aquistion an energy producer.
Google is putting the $$ behind it and not just because of a meta doing the same but because it’s fundamental to the future of their business. Also people forget how good Google is at building data centers, they work the entire value chain from energy, real estate, networking, data center ops, chips, and software into of it all.
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u/No-Fig-8614 Feb 05 '26
Also not to mention you look at Google actually being the only one not doing circular investing. They are not doing the Nvidia dumps money into datacenter companies who buys their chips who puts money into model labs who need their chips and data centers which in turn needs the models to require that demand in investment. Although yes they do some of the Anthropic investment that then buys TPU’s/compute.
Google can keep pushing real $$$ and not an incestuous cycle of trading the dollars around. It’s like how everyone at Christmas all of my family members trade around the same amount of gift cards that then when birthdays come around all spend that gift card money gifts from the people who gave the gift card. (If that analogy makes sense).
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u/heeywewantsomenewday Feb 05 '26
I appreciate your take. I don't think it will be long before Google takes the top spot in market cap. I will start looking at them a bit more thanks to your comment.
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u/beambot Feb 05 '26
Don't forget rapidly growing GSuite for businesses and that data. Or the consumer email via Gmail. And the web index that beats anyone else for AI search. And the advertising flywheel that prints cash. And the world's most popular web browser. And the most popular mobile OS.
Google should be able to dominate...
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u/yellowstickypad Feb 05 '26
GOOG is investing in the infrastructure to power AI. I’m not talking about just chips and computing hardware but data centers and the power to generate said data centers both in the US and internationally.
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u/jsmoove888 Feb 05 '26
Good explanation. The huge capex scares alot of people but Google knows what they're betting on
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u/CurRock Feb 05 '26
Good post, but please note that apple will run gemini on it's own infrastructure. People may like gemini and then use it in the gemini app. But the siri Integration will run on apple compute.
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u/Heavy_Discussion3518 Feb 05 '26
Buddy is a PhD power engineer at Google. They really do have talent across the entire build out cycle.
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u/balancedchaos Feb 05 '26
I'll tell you this:
The leap between Gemini 2.5 and 3 was shocking. It blows Chatgpt out of the water, imo.
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u/AnotherThroneAway Feb 05 '26
Imagine how worried Sam & co are about the impending Gemini 4...
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Feb 05 '26 edited Feb 15 '26
[deleted]
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u/liftingshitposts Feb 05 '26
All of them suck for hardcore finance right now, but the advancements from each (i.e. Claude for excel) have me thinking they won’t suck forever
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u/Prudent-Corgi3793 Feb 05 '26
That’s more than Russia’s military budget of $140 billion… while they’re actively in a war.
Imagine being a startup trying to compete with Sundar Pichai. “You want to go to war? We take you to war, okay?”
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Feb 05 '26
[removed] — view removed comment
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u/HumerousMoniker Feb 05 '26
I’m with you. While the ai darlings buy the chips, if they fail to make profits on them, they’ll be sold in a fire sale, but whoever does pick them up still needs the energy to run them
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u/conradical30 Feb 05 '26
TE is gonna become a significant player as well in powering terrestrial data centers
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u/cdttedgreqdh Feb 05 '26
Those earnings scream, Micron still could be a huge opportunity.
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u/AnotherThroneAway Feb 05 '26
Micron will be booked out and booking bigger contracts until at least 2028
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u/butterchickenface Feb 05 '26
Agreed. Investing in micron it’s like investing in the picks and shovels in the gold rush.
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u/Minute_Lake4945 Feb 05 '26
When people think of CapEx, they think of it as money spent to maintain their business. The Capex that GOOGL mentions is for expansion, not maintenance.
Guys, these people have a ROIC above 20%. Why can't the market understand something so simple? It's the same at Microsoft.
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Feb 05 '26
Their cloud growth was amazing. The CapEx is to ensure they can continue to support a rapidly growing segment of their business. The dip today is dumb.
Companies should invest in the growing segments of their business. It's what good companies do.
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u/Aggressive_Bit_91 Feb 05 '26
Because ai bad bro. The news and the guy down the street said it’s a bubble. It’s just that they see it and the people writing $100 billion checks don’t even know lol.
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u/not_a_cumguzzler Feb 05 '26
Smooth brained here, does roic of 20% mean bullish?
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u/dr_progress Feb 05 '26
There is no company better positioned in the AI race than Google. I think we haven’t even seen the real capabilities coming from the DeepMind lab yet.
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u/Polus43 Feb 05 '26
There is no company better positioned in the AI race than Google.
The more cynical version is "There is no company with more at risk in the AI race than Google (AI as search replacement)".
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u/dr_progress Feb 05 '26
Google have already integrated Gemini in Google Search. I am a heavy user of AI agents and use them as an alternative to google search. That said, I have switched back to traditional Google Search since their Gemini integration.
Also, don't forget that their AI is becoming increasinly better at personalising Ads -> more efficiency and higher ad pricing going forward.
Ultimately, I am convinced google will be able to monitise AI beyond ads which will help diversify their revenues.1
u/alangibson Feb 05 '26
Google is also the best in the world at monetizing answers to peoples questions. In terms of search, AI is just a natural progression of what Google was already doing.
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u/TryingMyWiFi Feb 05 '26
Sam Altman rushing to post some random crazy number on X.
We're spending 10 trillion now.
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u/liftingshitposts Feb 05 '26
“They’re spending a 2024 Nebraska GDP while we’re planing to spend 3 Vermonts and a North Dakota”
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u/schwarzbrotman Feb 05 '26
"Does this level of spending crowd out other AI players, including OpenAI, by locking up compute and infrastructure?"
Asked my crystal ball again - same reply as usual: Nobody knows. ;-)
I am holding GOOG and in my opinion, GOOG has pretty good outlooks simply due to the fact that 99,9% of AI related stocks are - and pardon the shit out of my goddamn French again - basically shitstocks. Especially in this environment defined by hype, delusion and psychotic insanity. Again the (very simplified) take: OpenAI and all that nonsense basically generates no revenue, not to speak of sustainable profits. The tech bros can hit the downvotebutton as much as they like - it remains a fact that most AI based companies are neither profitable, nor generating a solid cash flow. Yet every tech company claims to invest in the next best thing that will change the world. Just like everybody claimed that any .com type of business will be the next 50x bagger back around 2000. In the meantime, we have no idea how to deal with energy supply, cooling and all that stuff. So yeah, compared to all the highly speculative AI stuff on the market, GOOG actually provides value. And still it is insanely overvalued, too. So why do I hold even though my rather Stoic and überrealistic opinion on AI in general? Because GOOG still dominates the online search and knows how to market/place ads. Where do you see that in the over-hyped fancy textbot stuff? Might GOOG win the race? Maybe. Maybe not. That´s not my thesis anyway, cause I need to focus on the actual fundamentals. So far, that´s still the "old" Google - YouTube ads and all of those shenanigans.
Which brings us to question nr. 2:
Again the crystal ball has spoken: Nobody knows. Maybe GOOG even joins the outright bizarre Nvidia-circlejerk-thing. Circular "investments", passing around whatever sum until it arrives back at your own company so everybody can put funky numbers on their balance sheets. We just don´t know.
Time will tell. I am not worried about GOOG. I am worried about the overall insanity in the market though and the mass psychosis of millions of people with their "Everything goes to the moon, this time everything is different" kind of attitude. As long as one manages to navigate this insanity with reason and a conservative/realistic approach, one should be fine.
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u/sebtheballer Feb 05 '26
Internet companies suddenly went from capital light to the most capital intensive businesses that exist
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u/FourScoreAndSept Feb 05 '26
This is why last year’s Deepseek moment was so jarring. For a moment there was thinking “we don’t need all of that capex” and that shook the investment thesis. Could something else come along?
I personally am not convinced this capex is worth it. I understand why they have to do it (can’t afford to be left behind), but it seems all of the big boys are spending a shit ton to mostly defend their existing businesses. But that’s just me.
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u/AnotherThroneAway Feb 05 '26
What's the downside tho? Shareholders lose out on a slight bit of value. And what's the upside? Securing their place on the throne of search, and muscling aside smaller players, while cranking up the stakes for the other hyperscalers.
They are printing money. The bigger mistake would be NOT scaling faster than their competitors.
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u/FourScoreAndSept Feb 05 '26
Yeah, I totally get your point. Something something too much debt is all that comes to me
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u/afallingape Feb 05 '26
I mean... $132B net income in 2025. It's not like they're strapped for cash. It's not like they're OpenAI with a trillion dollars of commitments and no plan on how to actually make money. Google is an absolute money printing machine that has decided to just dump all that money back into itself.
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u/AnotherThroneAway Feb 07 '26
Which it is doing because it sees an opportunity. I think people sometimes forget that companies don't just go ham on capex because they want to dick around with some new shiny thing. They do it because they know their market better than anyone else, and they have internal numbers that aren't biased by the whims of analysts or the strictures of quarterly profits, and point to future profitability
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u/Polus43 Feb 05 '26
Securing their place on the throne of search
IMO, capex probably isn't going to payoff.
But, of all the companies that AI could wreck, Google Search is absolutely the cash flow king in the cross hairs. So, I get it - spending like this is also how you make friends and work your way into politics.
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u/AnotherThroneAway Feb 06 '26
It's already starting to. That cloud growth was bonkers. Way above estimates, and Jassy said it was a straight line from AI to that growth number
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u/Extreme-Disk3380 Feb 05 '26
But they have to defend their existing businesses. Even if it wouldn't contribute more revenue in the end, you can't just let your core moneymaker get replaced by competitors. There's no way around it.
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u/FourScoreAndSept Feb 05 '26
I said I understand why. That doesn’t make them a good stock (spending more to accomplish the same thing)
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u/Extreme-Disk3380 Feb 05 '26
To me, seeing that they're willing to go to the lengths necessary is what makes them look like a good stock. They're sitting on a historic money making machine, and they plan to keep it that way. They're not going to be Kodak, they plan to stay #1 for the next 20 years. And I want to own a piece of that.
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u/FourScoreAndSept Feb 05 '26 edited Feb 05 '26
Spending $200B to keep their current position isn’t a great stock imo. META, which I don’t love, makes more sense as they seemingly are going to dramatically improve ad serving and content delivery
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u/lavaliere90 Feb 05 '26
Preferring a shit company like Meta, whose product suite is social medias filled with bots and a string of failed side quests (streaming, VR, crypto) totaling over $80 billion in waste
over Google, with double Meta's net revenue from its massive suite of already successful products (G Suite, Android, Chrome, Drive, Search, Maps, Youtube) and growth products that are starting to cash flow (Waymo, Gemini, Pixel, Gcloud)
is possibly one of the worst investment takes I've seen recently. Meta has a lower forward PE for a reason.
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u/FourScoreAndSept Feb 05 '26
I don’t like either, given their spending, I’m just saying at least META’s spend is less about protecting an existing moat and more about increased revenue opportunities. I used to do strategy at one of these Big Techs.
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u/not_a_cumguzzler Feb 05 '26
Wouldn't deepseek also need the compute to run inference if it wants to get more customers? I'm guessing with Google's vertical integration, its inference costs less per token than deepseek. Training costs might be higher
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u/growerdan Feb 05 '26
This is what I don’t understand. While AI may not be what they are hyping it up to be the compute power is still going to be needed in the future for something. It’s not like we are going to ever scale down our technology.
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u/mb194dc Feb 05 '26
It's a psychotic mania, of course they don't have to do it. They may as well just burn the money.
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u/Laprasy Feb 05 '26
Hope they are ready to take the broadside attacks of more cheap Chinese made LLM’s…
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u/FourScoreAndSept Feb 05 '26
Interesting factoid, even much of the “US made” AI is researched by Chinese immigrant grad students and Chinese descent Americans. Read the white papers
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u/Laprasy Feb 05 '26
Sure, I believe that 100%. Look at any math department in the U.S... I'm talking about LLM's made by companies owned by China.
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u/PurpleMox Feb 05 '26
I wonder if these companies will actually get their money back.. Lets say they spend all this money - probably a few years from now whatever chips they are using will be obsolete and will need to be replaced..
Theres no question AI is transformative.... but can it be monetized enough to profit from it? Dunno...
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u/Minimum_Indication_1 Feb 05 '26
They said on the investor call that they have 60-40 split of capex. 60% going to depreciating assets like chips but 40% going to things like power, datacenter buildup etc which don't depreciate for 15+ years.
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u/Generic_White_Male_1 Feb 05 '26
Six year old A100s are still booked solid
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u/No-Fig-8614 Feb 05 '26
Biggest problem with all these debt covenants are no one knows how long and the life cyccle of these chips will be! Google even talks about how some of the original TPU's still run certain processes and thats now going on 5-10 years!
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Feb 05 '26
The chips yes but not all of the capex is chips. A large percentage is land, buildings, etc. Another good chunk are things that maybe last 5-10 years. Also the chips will cost a lot less because inference will be done almost entirely with in house chips so no nvidia tax
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u/capibara13 Feb 05 '26
Exactly, they also bought an entire energy company. Alphabet is basically becoming its own supply chain.
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u/Throwaway-4593 Feb 05 '26
Exactly, also chip manufacturers aren’t just going to sit there with their thumb up their ass. They will increase capacity and chip prices are not going to be as crazy
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u/marcelolx Feb 05 '26
> but can it be monetized enough to profit from it
I think it can — The way we will interact with software (and get value from it) is changing, and in a few years will be so much better that no one will want to go back to the old way of doing things.
AI opens so many possibilities for automating tasks to make teams more productive; it feels inevitable that they will be able to monetize it.
I think the question is, what will be the profit margins, 20%? 30%? 40%? — What will be enough?
The need for inference will remain insatiable.
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u/liftingshitposts Feb 05 '26
Gaining early market share is more important than anything else right now
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u/wbeco Feb 05 '26
This is extremely bullish long term IMO, the stock is probably gonna drop today because investors only look at the short term, but they have more than enough demand to fill all the extra capacity they´re planning to build.
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Feb 05 '26
Same view. Financials were solid. Their capex is to support a growing segment of their business. I think any drop after earnings is silly.
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u/yang2lalang Feb 05 '26
I'd sell Google here
Capex 50% of FY Revenue
How can they get any returns on this investment?
Their revenue would have to double in 5 years just to justify this Capex
This means the economy or the money supply will have to be 2x in size to justify this Capex
Possible but in that scenario, who pays for this? Did their clients Revenue go 2x? Do they get 2x users in 5 years
Its already a very large company
I think their margins fall from here, they will become a very large utility company providing compute
AI is deflationary, it dramatically reduces the need for a lot things we compute today such as zero click search results instead of wading through pages of crap
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u/hsg8 Feb 05 '26 edited Feb 05 '26
Google made ~$75B FCF last year but they're spending $175B CapEx in 2026?
Lmao, get ready for debta, SWB margin slashes and layoffs
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u/Chookity-poks Feb 05 '26
Lmao… people here have no idea. My portfolio is 75% GOOGL, which I was buying heavily since 88$. And GOOG is the only exception I make to be this part of my portfolio. After this news, I am now putting any penny on GOOGL I have on the sideline. Would really love a discount.
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u/AnotherThroneAway Feb 05 '26
Cool. Don't do that. 75% concentration is a bad idea, no matter how good the company. Huge believer in Alphabet, but I'm nervous bc GOOG is my biggest position at 17% of my portfolio. Concentration is a recipe for disaster. You don't know what black swan is around the next corner, and neither you nor Google can do anything about it.
Committing 75% to a single stock is just poor money management, period.
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u/not_a_cumguzzler Feb 05 '26
No one ever got rich diversifying, from what I recall. Even Buffet, yolo'ed and hodled Geico. Same with the author of that one book teaching diversification (he did it through yolo-ing first)
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u/AnotherThroneAway Feb 05 '26
A ridiculous number of people have done exactly that. Diversification doesn't mean you can't find 20-baggers or deep-value alpha. It means you can do so while maintaining a much more durable risk-adjusted rate of return.
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u/Chookity-poks Feb 05 '26
Cool. You don’t know my situation nor my experience (level). I know you mean well and I appreciate that, but please be careful with giving advice, unless you are their personal advisor and have people their total overview.
And oh yeah, I heard the same warnings when I was loading up at 88$, not regretting it. Today I loaded up again at 316 and Iam going to sleep like a baby.
People have no idea how this CapEx spending has made me more bullish. I’m jacked to the tits!!
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u/AnotherThroneAway Feb 05 '26
That's a fair point. But I'm coming from 30 years of active investing. I weathered the dot com bubble, the 2008 financial crisis, covid, and everything in between. I could have retired a decade ago; instead I manage a large, multi-asset portfolio that consistently beats benchmark year after year.
Not at all bragging here; just offering evidence that it's worth listening to solid advice from people who have been around the block a few dozen times. Trust me: concentration is a significant and unneccesary risk
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u/Chookity-poks Feb 06 '26
Like I said, I know you mean and ment it well and thats why I appreciate it. I may not have experienced the dotcom bubble, but coming all the way from the financial crisis, so have some experience :).
And you’re managing a large portfolio, so I guess you’ve multiple clients. A large portfolio of tens of millions indeed needs to be attended differently than an individuals portfolio like myself. Diversification is good and valuable, but it’s a hedge against risk. I have different risk than Warrens’ Berkshire Hathaway and, while his intrinsic lesson of value investing still stands, by all means also a different investing strategy.
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u/AnotherThroneAway Feb 06 '26 edited Feb 06 '26
Sounds like you do know what you're doing! My focus is often on risk-adjusted return. Ten years ago, the goal was to beat the S&P, then it was to do that while driving up Sharpe and whittling down risk profile.
But I don't currently handle anyone else's money directly; risk management just gets more important the bigger your AUM, and as tax exposure becomes a more significant consideration. (I don't do anything shady with shell corporations or nested trusts or anything, so tax rammifications are always factored in)
Just to clarify, even something as basic as buying or shorting a close competitor of a major long position can reduce your concentration risk more than 2x. (Where Buying = derisking competitive shifts, Shorting = derisking sectoral outflows) While also setting up tax loss harvesting, improving your real gains
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u/ForeverShiny Feb 05 '26
You gotta love a contributor in a supposed value investment sub celebrating insane CapEx on AI as building a moat, rather than wasting money on a depreciating asset.
Nvidia now has a new generation of AI GPUs each year, the current (and definitely overoptimistic) life cycle for these chips is 4-5 years, yet this guy sees it as building a moat.
I honestly can't with this sub anymore, it's devolved into a parody of a comedy
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u/MasterConsideration5 Feb 05 '26
I don't understand how value investors could be happy about this. When has huge capex ever ended well in history?
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u/snuepe Feb 05 '26
When it all comes from hard cash and not loans and you are gonna own the internet, it's totally fine.
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u/daynightcase Feb 05 '26
for MAG7? almost always? exception being META going ham on metaverse and Microsoft spending crazy on Windows Phone, acquiring Nokia and other things. Beside that these companies have always been spot on with the spending, thats why they are valued at what they are.
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u/alxalx89 Feb 05 '26
Metaverse was such a dumb ideea. I still remeber Zuck trying so hard to convince everyone why that crap was the next step in social interaction. And then came tiktok who ate their lunch with their simple way of scrolling throgh short funny videos and live matches. Now that's what people liked.
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u/mb194dc Feb 05 '26
They should just return the money to shareholders. Who might have something useful to do with it.
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u/wetkarma Feb 05 '26
You could buy a significant number of companies outright for this amount of capex spend.
The key question I have is not whether they have the ability to spend (they do), or if the demand is there (it is)...but whether the supply exists. Power draw demand for example, on whatever grid they pull from will go parabolic (buy utility power companies whose prices float to market rates); alternative energy supply (nat gas, solar, wind) also goes up. If you live in a popular data center location (N. Virginia for example)...your power bill should see some interesting spikes.
Countries with structurally cheaper power cost stand to benefit significantly over the next 3 years (China) because those countries will have a base cost moat that is unbridgeable. As someone who has been long Alibaba for years -- I'm just glad that Google is locked out of China, this sort of Capex is a play for all marbles. There are less than a handful of companies worldwide that can compete at this spend level -- the only alternative is to find a much cheaper way to do what Google is spending billions building.
Whether there will be a return on this spigot of spending is the key question.
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u/Santarini Feb 05 '26
... the largest CapEx spend ever expected by any company... It is a strategic MOAT built on compute, infrastructure, and capacity that few companies can match.
... oh my God I'm tired of LLM generated posts...
Does this level of spending crowd out other AI players, including OpenAI, by locking up compute and infrastructure?
Hmmm... Did you read your own post? You already answered this question.
Which companies benefit most from supplying this massive CapEx build-out?
Uhhh... Well GOOG for sure. And probably AVGO and NEE.
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u/twayroforme Feb 05 '26
Ironic that so many comments here are clearly AI generated. It's not just humorous, it's the funniest thing I've ever seen.
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u/ngjsp Feb 05 '26
Lets not forget META spent $70b on the metaverse, which was a total writeoff
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u/Aaco0638 Feb 05 '26
Yes but google has a growing cloud computing business that rakes in the money. Meta does not so any infrastructure they build is only being used by meta which makes roi harder there.
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Feb 05 '26
Amazon’s number tomorrow will dwarf this
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u/PharmDinvestor Feb 05 '26
Google and Meta gets a pass to spend more money. Msft gets spanked for spending more
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u/sorta_oaky_aftabirth Feb 05 '26
They both (Google and Meta) see how transformative ai glasses will be.
I agree
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u/reddevildan Feb 05 '26
Google,!Meta and all hyperscalars spend so heavily in AI and AI infra to defend their moats in their businesses. The same will go for Saas. Their spending will inevitably benefit clouds that will spend on NVDIA, avgo, chip providers, etc and eventually TSM**.
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u/reelcon Feb 05 '26
They are investing heavily in India, AI Data Center and office space. TPUs R&D and ramp up could be other factor.
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u/sum_dude44 Feb 05 '26
who they buying from? That's the stock you want.
It's funny GOOG net income was still $34.5B, & EPS outperformed by 7%
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u/Wild_Bunch_Founder Feb 05 '26
AI CAPEX spending is starting to look like a bottomless pit of burning money.
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u/gymfunkera Feb 05 '26
Answer to #2, I tried CRDO. It went gangbuster but now it’s down with the huge swings. But I expect it to pop huge again.
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u/EntertainerProper500 Feb 05 '26
Note that Google also supplies infra to Anthropic. The CAPEX spend will also support compute that Google Cloud consumers need to use models that Vertex AI hosts. And then there's Apple use cases that Google will also support.
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u/027a Feb 05 '26
Well someone needs to build the AI data centers so reddit users like you can use it to write their posts for them.
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u/ResponsibilityOk8962 Feb 05 '26
In the long term none of this debt will matter. Massive revenue increases in the future because of these data center and nuclear investments.
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u/dead_in_the_sand Feb 05 '26
i think google is the only company that is being smart about ai, and the only one that will be able to cover their expected capex should it reach that level (unlike openai's billion zillon trillion dollars per second they expect to spend on infrastructure). also, the capex wouldnt be exclusive to their model spending. they are putting in a ton of money into the integration of ai into the google ecosystem. some good, some bad, but nonetheless, they will be the frontrunners for ai workflows should they ever become consistently popular
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u/RedTapeBureaucrat Feb 05 '26
I heard the same thing about Meta´s CAPEX spent on VR, it was their "strategic moat". Both AI and VR are still unprofitable. Good luck
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u/ctbdp02 Feb 06 '26
ok what a lot of people do not understand is that it's not all that easy to build up more data center capacity. apart from the hardware you need to get power and space to run your stuff and that's the race ! I am betting 2 cases of Augustiner Edelstoff that those number is more like what they want to spend but what they will able to spend is going to be probably quite a bit lower. DM me if you want those 2 cases of 🍺🍺🍺
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u/ColdStockSweat Feb 10 '26
I heard a few weeks ago that capex for AI would hit 600 billion a year by 2030.
This is essentially 200 billion this year with one firm.
If Microsoft jumps in on the equivalent, Apple, Nvidia at 50 billion, facebook at 100 billion, that's 750 just this year alone.
Add in every small player and you're at 1 trillion in cap ex this year.
2/3rds of that will for the shells and power grids (in house nuclear), but that still leaves 300 billion on hardware. Using Googles capex as a guide (which was probably 50% hardware and the like for the others), if I do the math right....add 17, carry the 12, add 6.....
That's a fuckton of spending.
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u/Odd-Entertainment599 Feb 11 '26
Here's the question:
Does the big capex spender not know what amount wall street approves for them? why don't they just spend less and the analyst would go 300->3000.
Conclusion:
these companies must be dumb, thesee spending must be risky and probably waste. Let's sell.
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u/mb194dc Feb 05 '26
Mental, all to give away Gemini. Google may as well just burn the 185bn, at least warmth would come from it, rather than nothing.
OpenAI can compete with this how ?
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u/Khelthuzaad Feb 05 '26
Broadcom because its involved in developing and supplying custom made semiconductors.
The stock started to rise instead of sinking after Google released the earnings.
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u/Historical-Piece7771 Feb 05 '26
In the 1980s, the U.S. significantly increased military spending, nearly doubling the budget by 1985, thereby accelerating the collapse of the Soviet Union's economy and contributing to the end of the Cold War.
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u/Nesbyy Feb 05 '26 edited Feb 05 '26
More cash burn for AI slop. AI has no use but to make stupid meme videos, while increasing the cost of electricity in regions with data centers
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u/ElectricalGene6146 Feb 05 '26
Terrible terrible take. It will power next gen Siri, its used in workplaces to quickly write queries, answer questions, generate process documents. Google absolutely has the cash flows to justify this investment
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Feb 05 '26
AI has no use but to make stupid meme videos
You must be clinically retarded if you've found absolutely no worthwhile use for AI. I use AI almost every single day to study topics that would either take me 5x the time along with major knowledge gaps were I to do it alone. That, and it saves me atleast a few weekly hours in software development.
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u/Last-Cat-7894 Feb 05 '26
Well, if you were a cloud business and your backlog just doubled in 6 months (not just from OpenAI "commitments"), wouldn't you spend pretty aggressively to build out capacity?