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Greetings! Tech’s AI-driven capex splurge lives! Google parent Alphabet today said it expected to lay out $75 billion on capital expenditures this year, a 43% lift over 2024. That puts Google very close to Microsoft, which has said it will spend $80 billion building artificial intelligence data centers in its fiscal year ending June. Meta Platforms, with plans to spend as much as $65 billion on capex, is only a little way behind. Amazon, meanwhile, projected $75 billion in capex for 2024 and likely more this year. In other words, the three big cloud firms and Meta are projecting around $300 billion in capex, mostly related to AI, this year. To put that into context, the OpenAI-SoftBank Stargate AI data center venture plans to spend $100 billion in the near term and $500 billion over four years. We don’t yet know whether Stargate can raise the money. But there are no such questions about whether Google, Microsoft, Amazon and Meta can afford their spending plans. Alphabet’s fourth-quarter earnings on Tuesday, for instance, showed that the company’s operations generated $125 billion for the full year. That’s on top of the nearly $100 billion in cash and short-term investments on its balance sheet. Spending $75 billion on capex, plus buying back shares and paying dividends, is easily doable (more on Google’s results here). The same is true for Microsoft, Amazon and even Meta, although the Facebook owner is a smaller company by revenue. This piece we ran today showed how Meta’s capex spending is a much higher portion of its revenue than it is for the other three companies. The bottom line is that the surprisingly cost-efficient results shown by DeepSeek, the Chinese AI model, don’t appear to be deterring U.S. firms from spending a fortune on capex. That’s good news for Nvidia, whose stock was rattled by the DeepSeek news. Conversational AI chatbots have reached a new stage of business maturity—they’re now being thrown into cellular wireless plans as marketing lures. Verizon announced on Tuesday that it would offer its customers Google’s AI subscription service as a perk, at half the regular $20 a month price. That’s a good deal—but there’s no guarantee it will move the needle either for Google or for Verizon. The phone giant already offers discounts on video-streaming services, such as a package of Netflix and Warner Bros. Discovery’s Max. And the offering is anything but seamless. In the case of Netflix and Max, for instance, Verizon’s app says consumers need to enroll in the program and then set up accounts at each service separately (it’s a bit easier if you already have a subscription to one of the services). That may be why Verizon’s marketing tactic isn’t helping the cellular provider. The company badly trailed its rivals, T-Mobile and AT&T, in growth last year: While T-Mobile added more than 3 million new cellular customers on contracts (the bulk of the business), and AT&T added 1.7 million, Verizon added less than 900,000. And if it’s not helping Verizon attract new customers, it likely isn’t doing much for partners like Netflix and WBD. Google shouldn’t bet on anything much coming out of this deal.
- Andreessen Horowitz hired Daniel Penny, a former Marine acquitted of choking a homeless man to death on a New York subway, as an investing partner in its American Dynamism fund, the fund’s leader, David Ulevitch, said in an internal memo on Tuesday (more here).
- Snap’s revenue grew 14% in the last quarter to $1.56 billion, buoyed in part by the growth of its subscription service, Snapchat+, which hit 14 million subscribers in 2024.
- Meta Platforms is merging the teams behind Facebook and Messenger into one unit as the company prepares for layoffs across the business next week.
- Music-streaming giant Spotify reported its first full year of profitability this morning, after more than six years of losses as a public company. Operating income in the fourth quarter was €477 million, compared with a loss of €75 million a year earlier, on 16% higher revenue.
- Fintech startup Deel said on Tuesday that General Catalyst and other investors have bought $300 million in shares owned by early investors. Abu Dhabi–based sovereign wealth fund Mubadala was one of the investors, according to CNBC.
- The Chinese government on Tuesday launched several investigations into U.S. companies including Google and announced retaliatory tariffs on some American imports such as coal, crude oil, liquified natural gas, agricultural machinery and pickup trucks.
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