By Alphabet’s plans to keep spending big on artificial intelligence is helping chip stocks on Wednesday.
In its earnings call on Tuesday, Alphabet told investors it plans to spend $75 billion on capital expenditures in 2025. That’s a major leap from the $52 billion the Google parent spent on capex last year and higher than Wall Street was expecting. It’s also a promising sign that the AI race that’s been the driver of the sector’s bull thesis is still going strong.
The expectation of heavy spending this year dismayed Alphabet investors—the stock was down more than 7% before midday—but it’s a win for chip stocks, which will benefit from that spending.
The tech giant’s outlook for spending should soothe investors after last week’s steep tech sell-off on fears that China’s DeepSeek AI model might cause firms to rethink their plans for investment in sophisticated chips needed to train AI models.
Nvidia, which lost a record $589 million in market cap as tech plunged last Monday, was up almost 5% on Wednesday, trading at $124.08 around midday. Shares of Broadcom also rose, up more than 6% to trade at $236.17 a share.
Taiwan Semiconductor Manufacturing Company stock rose 3%, Super Micro Computer was up 10%, and Micron Technology gained 2%.
“The capex figure is great for Google custom silicon partner for accelerators, Broadcom, and seems very good for Nvidia too since Blackwell has to be getting bigger in there for Google Cloud,” analysts from Melius Research wrote in a note on Wednesday. “While Nvidia may face investor concerns around this Blackwell product transition and China, the data points for Broadcom keep stacking up to validate their long-term outlook.”
“Their decision to spend $75 billion on capex — we were at $66 billion, Street was at $58 — was surprising to the Street, but not surprising in the context of the AI mania and arms race we’ve seen with all these tech companies,” Richard Kramer, a senior analyst at Arete Research, said, speaking to CNBC on Wednesday.
Other tech titans have also signaled they plan to keep spending big over the next year.
Meta said it would expand its AI teams “significantly” this year, with plans to raise its capital expenditures spending to $65 billion, up from $60 billion in 2024.
Microsoft said it was planning to spend around $80 billion on capital expenditures in its 2025 fiscal year. The software giant’s capex spending for the last quarter came in at $22.6 billion, a 96% increase from the same quarter last year.
Tesla, meanwhile, said in a recent filing that it expected capital expenditures to surpass $11 billion in 2025, as well as for the next two fiscal years.
“Huge week for Big Tech earnings as Zuckerberg, Nadella, Cook, and Musk doubled down on their AI visions and what this means for each of these tech stalwarts looking ahead,” Dan Ives, an analyst at Wedbush Securities, wrote in a post on X over the weekend.
