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Unpacking Alphabet’s $75 billion capex plans

A spending spree on data centers, custom chips, and undersea cables.

2/5/25 12:11PM

Investors were disappointed with Alphabet’s Q4 earnings yesterday, evidenced by the stock’s subsequent tumble.

While Alphabet delivered fairly strong earnings, the issue was a slowdown in revenue growth. Sales grew 12% from Q4 2023, which is far below last quarter’s 15% growth rate.

But there were some interesting details from the earnings call. Despite expectations that 2025’s capital expenditures would be a slight bump up from 2024’s $52.5 billion, Alphabet CEO Sundar Pichai told investors that the company has since upped that number to $75 billion. This comes just weeks after Meta CEO Mark Zuckerberg announced that his company would spend up to $65 billion on AI-related capex. Big Tech companies are all following suit with jumbo-sized capex plans for 2025.

What is Alphabet gong to be spending that big pile of money on? According to CFO Anat Ashkenazi, “The majority of that is going to go towards our technical infrastructure, which includes servers and data centers.”

Ashkenazi said that current computing demand is exceeding supply and the company is racing to increase capacity. Pichai said that in 2024, the company broke ground on new data center campuses in South Carolina, Indiana, and Missouri. The company also announced plans for seven new subsea cables to strengthen global infrastructure.

Much like the rest of the industry, Alphabet is also investing in its own Trillium TPU AI chips, lest they become too dependent on market leader Nvidia. But they are still making sure they can sell cloud computing access to Nvidia’s popular products.

“We also continue our strong relationship with Nvidia . We recently delivered their H200-based platforms to customers. And just last week, we were the first to announce a customer running on the highly anticipated Blackwell platform.”

Pichai said that Google Cloud customers are using “eight times the compute capacity for training and inferencing than they were 18 months ago.”

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Paramount Skydance reportedly preparing an Ellison-backed Warner Bros. Discovery takeover bid, sending shares soaring

Paramount Skydance is preparing a majority cash bid for Warner Bros. Discovery, The Wall Street Journal reported, sending shares of both companies surging. The Journal’s sources say the deal is backed by the Ellison family, led by David Ellison.

WBD shares were up 30% on the report, while Paramount Skydance jumped 8%.

The offer would cover WBD’s entire business — cable networks, movie studios, the whole enchilada. That comes after WBD announced plans last year to split into two divisions: one for streaming and studios, the other for its traditional cable and TV assets. A recent Wells Fargo note gave WBD a price target hike, primarily because the analysts viewed it as a prime takeover candidate.

If the deal goes through, it would bring together HBO, CNN, DC Studios, and Warner Bros.’ film library with Paramount+, Nickelodeon, and MTV, all under one umbrella.

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If the deal goes through, it would bring together HBO, CNN, DC Studios, and Warner Bros.’ film library with Paramount+, Nickelodeon, and MTV, all under one umbrella.

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As tariffs take root, August new vehicle prices climb by the most in more than 2 years

According to data from Cox Automotive, 17 vehicle brands raised prices of their new vehicles by more than 3% in August.

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Netflix taps Amazon to sell streaming ads in new partnership

Starting this fall, brands will be able to access Netflix’s premium ad slots using Amazon’s buying tech.

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Bank branches are still closing at breakneck speed in the US

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Fox and News Corp slide as investors digest $3.3 billion Murdoch succession settlement

Fox and News Corp shares dropped on Tuesday after Rupert Murdoch’s heirs agreed to a $3.3 billion settlement to resolve a long-running succession drama.

Under the deal, Prudence, Elisabeth, and James Murdoch will each receive about $1.1 billion, paid for in part by Fox selling 16.9 million Class B voting shares and News Corp selling 14.2 million shares. The stock sales will raise roughly $1.37 billion on behalf of the three heirs.

The new trust for Lachlan Murdoch will now control about 36.2% of Fox’s Class B shares and roughly 33.1% of News Corp’s stock, granting him uncontested voting authority over both companies for the next 25 years. Originally, the Murdoch trust was designed to hand over voting control of Fox and News Corp to Prudence, Elisabeth, Lachlan, and James after his death.

Investors are weighing the trade-off. Clear leadership under Lachlan may resolve conflict internally, but the share dilution, executed at a roughly 4.5% discount, means long-term investors now hold slightly less clout than before.

Both companies’ stocks were trading close to all-time highs prior to the announcement.

Unpacking Alphabet’s $75 billion capex plans

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