✨ The $315B AI Spending Spree
Hey Snackers,
The Seaport 1 building in Manhattan, or the “Leaning Tower of New York,” is an unfinished luxury condo building that slants three inches to the north. “It’s shaped like a banana right now,” an attorney argued in one of the two dozen lawsuits involving the building.
Last week, the market ended down after President Donald Trump said he would be announcing reciprocal tariffs on “everyone” sometime this week. The S&P 500 fell 0.9% while the Nasdaq 100 was down over 1%. Every S&P 500 sector ETF declined on Friday but one (energy).
The US’s most-watched annual broadcast is over, but whether your team won or lost, you can win some bragging rights by tackling these quiz questions:
Yesterday, more than a quarter of Americans:
Watched the Puppy Bowl
Watched the Super Bowl with friends
Ate buffalo wings while watching the Super Bowl
Had some sort of bet placed on the results of the Super Bowl
Big Tech’s $315 billion AI spending spree
Alphabet and Amazon reported earnings last week, and the big news was the even bigger numbers these two members of the Magnificent 7 are planning on spending on AI-related capital expenditures in 2025. On Tuesday, Alphabet promised a $75 billion pile of cash to spend on capex, but on Thursday, Amazon said, Alexa, hold my beer, because we’re going to need both hands to shove $100 billion toward our AI future.
All in on AI: It’s not just Alphabet and Amazon. At the start of the year, Microsoft’s president wrote in a blog post that the company was on track to spend $80 billion on AI data centers in 2025. Then, Meta CEO Mark Zuckerberg said his company would spend up to $65 billion on capex, including a city-sized data center.
In total, the four companies will spend over $315 billion in the service of AI. To put that number in context, with the US population hovering around 345 million, they could instead give every man, woman, and child nearly a thousand bucks each. Another way to look at it? That’s more than the market cap of Coca-Cola, which happens to report earnings tomorrow.
The Takeaway
While investors have been raising questions about when all this AI spending will pay off and the news of China’s cheap DeepSeek AI model caused AI darling Nvidia’s stock to plunge, the excitement over AI is still very much happening. Nvidia and other stocks hit by the DeepSeek freak-out have regained much of their losses, and companies like Meta are laying out their path to profitability. If Pinterest can leverage AI to power its most profitable year in history, there’s a lot of optimism that Big Tech can, too.
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Stories we’re watching
Did Amazon finally surpass Walmart? For a long time, we’ve been monitoring a major metric: who rules the roost when it comes to generating revenue on the S&P 500. Walmart has been the undisputed leader, but Amazon’s latest earnings look likely to finally take the crown. We won’t know for sure until Walmart reports earnings on February 20, but analysts predict it’s Amazon’s time to reign. See the chart.
Sometimes activist investor Bill Ackman revealed he has built an over $2 billion stake in Uber, which sent the stock soaring as his post was filled with praise: “Uber is one of the best managed and highest quality businesses in the world.” It was a welcome bump after the company reported earnings that underwhelmed. This week, we’ll get earnings from rival Lyft, which recently announced a partnership with Anthropic to integrate its Claude AI assistant.
Worth a read
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Not your regular startup… Elf Labs won landmark rights to icons like Cinderella, Snow White & Peter Pan. Now they're scaling: think patented next-gen tech for headset-free VR; two funded TV shows, & licensed merch across 30+ markets — a $2T disruption.1
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Interested in tapping into the potential growth of the largest 20 stocks in the US? Check out iShares Top 20 US Stocks ETF (TOPT).
Snack Fact of the Day
Not great real estate: a California town is slipping four inches a week toward the ocean.
This week's events
Earnings expected from McDonald’s, Lowe’s, ON Semiconductors
Earnings expected from Coca-Cola, DuPont, Humana, Marriott, DoorDash, Lyft, and Zillow
January Consumer Price Index. Earnings expected from CME Group, Robinhood*, MGM Resorts, AppLovin, Reddit, Upwork, and HubSpot
January Producer Price Index. Earnings expected from Deere, PG&E, Crocs, CBRE Group, DraftKings, Coinbase, Airbnb, Roku, and Palo Alto Networks
January Retail Sales. January Industrial Production. Earnings expected from Owens Corning, Cisco, and Moderna
1 The ETF is concentrated in 20 individual stocks that can cover up to 8 sectors. Holdings are subject to change.
2 Source: S&P Global Indices for market cap as of Sept. 23, 2024. Past performance is no guarantee of future results.
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3 PWC Perspectives from the Global Entertainment & Media Outlook 2024–2028: Seizing growth opportunities in a dynamic ecosystem, July 2024.
4 Please read the offering circular and related risks at https://elflabs.com. This is a paid advertisement for Elf Labs’s Regulation CF Offering.
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