💰Google’s $185 billion spending plan

Alphabet released earnings yesterday, and things are looking pretty solid over at the Google parent company. The search giant has been riding high following the widely praised release of Gemini 3 in November, as well as growing enthusiasm around its lucrative tensor processing unit (TPU) semiconductor business. Prior to the earnings report, the stock was up more than 60% in the last 12 months. 

• 📺 YouTube’s Q4 ad revenue rose 9% to $11.4 billion.

• ☁️ Google Cloud revenue for the fourth quarter was $17.7 billion, rising 48% year over year. That’s an astonishing rate of growth. 

• 🔎 As for the golden goose? Google’s Search business brought in $63.1 billion, up 17%, and more broadly Google’s advertising revenue was $82.3 billion, a 14% increase year over year.

So, Alphabet’s the big winner? Nah, Broadcom is the big winner from Alphabet’s earnings.

• The search giant reported full-year capital expenditure to be $91.4 billion, in line with its own expectations. 

• However, the company’s 2026 capex is expected to be way higher than analysts thought: $175 billion to $185 billion, versus analysts’ $115.6 billion estimate.

• Those billions are going somewhere, and that somewhere is often enough Broadcom, the custom chip specialist behind the TPUs that Gemini is trained on.

Alphabet’s Class C shares were up about 2% after the release of earnings, but Broadcom jumped 6% on the print.

The Takeaway

Broadcom has enjoyed a halo effect from Google’s capex plans and the success of its Gemini 3 model over the past year.

The custom chip designer had tumbled after its most recent earnings report, though, with some analysts attributing the decline to the dearth of new customer announcements. But who needs new customers when your current ones are opening their wallets this much?!?

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Investors have given the world’s tech giants a long leash when it comes to dumping hundreds of billions of dollars into their respective armadas of AI data centers. Now that Alphabet has reported earnings, all eyes are on massive capex spender Amazon, which is due to report results today after market close.

How the market reacts to these numbers may go a long way toward resolving a key question that’s emerged in recent weeks: are investors growing impatient with airy executive assurances about AI dominance to come as tech companies go all in with billions of dollars of bets on the future? 

• The idea that big capex outlays now need to be paired with concrete evidence of growth has been gathering steam after hyperscalers Microsoft and Meta almost simultaneously announced much larger-than-expected capex in reports last week and received distinctly different feedback from the market. 

• Some analysts think the most important benchmarks to watch in assessing capex aren’t in the financials produced by the companies themselves, but rather by their customers.

• The market also seems to be getting slightly jittery about the idea that hyperscalers like Microsoft and Oracle have been making their investments based, in part, on growing demand from privately held AI companies. One of the big disclosures in Microsoft’s earnings report was that some 45% of its remaining performance obligations — a measure of the backlog of demand for its services — was tied to OpenAI. 

The Takeaway

Sherwood News’ Matt Phillips talked with a wealth of experts to zero in on how investors and analysts now seem to be weighing such factors, in the hopes of identifying the single magic data point to watch. 

For Amazon, it’s hard to narrow down. One factor to watch: its growing ties and possible investment in OpenAI. Amazon’s large deal with Anthropic is another. But as one analyst said, “Ultimately, the metric we’re looking at is… what cash flow can you generate over the long term from these investments? Is it going to be enough to justify the spend or not?”

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In Sherwood News’ exclusive interview with Allan Evans, the CEO of drone component manufacturer Unusual Machines, Evans discusses advisory board member Donald Trump Jr., opportune regulatory conditions, and the company’s plans for next year. 

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• 🏈 NFL: Seattle Seahawks quarterback Sam Darnold is the current favorite to be named the Super Bowl MVP, with markets* pricing in a 45% shot that the former Jet wins the honor. Drake Maye, quarterback for the New England Patriots, is priced as having a 27% chance. 

• 🤖 Grok: The Information Commissioner’s Office in the UK opened formal investigations into xAI related to Grok’s processing of data, particularly “its potential to produce harmful sexualised image and video content.” Markets think there’s only a 14% chance that Grok is banned in the UK before March. 

• 🏒 Hockey: We’re just days away from the Winter Olympics, and one of the marquee matchups will be the ice hockey tournaments for both men and women, each of which will feature the US-Canada rivalry on the ice. Among the men, Canada has a 44% chance of gold, followed by the United States with a 33% chance. Among the women, both the US and Canada have very high chances for gold, with the nearest competitor, Czechia, having just a 2% shot at the top prize.

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

Which food trend has recently gone mainstream in US restaurants, overtaking “fruit” in menu mentions?

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• Earnings expected from Amazon, Sony, Strategy, ConocoPhillips, Roblox, Reddit, Bloom Energy, Cigna, Affirm, Estée Lauder, Bristol-Myers Squibb, Atlassian, Barrick Mining, and Cemex