Ca$htag$: GOOGL Vast CapEx Justifies $500B Backlog in AI Acceleration

here on Schwab Network. I'm Diane King Hall alongside Kevin Hincks over at the Cboe. Time now for our cash tech segment. For that let's bring in our next guest. And that is Andy Swan co-founder of like folio. Joining us today with the latest sentiment data for alphabet Google. This feels very timely when you think about how the market is responding to all these existential questions about AI and the proliferation of it. You got all these heads of state speaking out about it today. And alphabet, Google is one of the winners in the market today. But walk us through your latest sentiment data on a headline level, Andy. Yeah, I think Google is one of the winners today and one of the winners long term and probably a winner forever, because this is a company that's executed against these type of opportunities over and over again for decades in a very strong way. And so when we look at, you know, what Google's doing in terms of data center systems, this is a category that's going to grow significantly. It's already growing very fast. But from, you know, half $1 trillion to $700 billion. And even beyond getting to, you know, probably $1 trillion within the next few years. So what Google is doing is investing in that. And Wall Street has punished Google for some of its CapEx spend. We think that this gives investors a unique opportunity to buy one of the best companies in the world. That is positioning itself strongly for future growth. You know, the stock down 10 to 15% off of highs. They're spending a lot of money because they have very good reasons to do so. You know, when you look at Google's backlog of, you know, future revenue that they've already sold that they can't fulfill right now it's 500. It's $500 billion. And that is more in the backlog than they've received in the prior 12 months. So they're set up to more than double their their cloud infrastructure revenues they're spending into it. I don't know anyone in the world that would say, you know, this is a bad idea to spend $200 billion for $500 billion backlog, except for, you know, some of the short sighted type of traders on Wall Street who are looking at cash flows over the next 2 to 4 quarters. So I think for long term investors, the story of the AI build out should be one that you think of as just getting started, just ramping up. And Google is in perfect position to take advantage of this because of their history of strong execution against opportunities like this, plus their commitment to ignoring, you know, short term concerns of Wall Street and looking at the longer long term opportunities that are in front of them. This is a really unique setup. We feel like in a very bullish one, and as we get to the winners and losers stage of AI, let's face it, Google, alphabet, meta two stocks that are on the move. On the upside today, they would benefit from a slowdown in, you know, Claude in ChatGPT and grok. They would they would benefit from that. Now your demand on your consumer demand growth shows absolutely no drop off. Yet there you see the divergence in the price of the stock and how it struggled. And this strange almost almost incredible narrative about spending and CapEx spending and how it's kind of taken over some of the narrative when if you take a step back and look at it, these are really smart people who are deciding to spend and invest their money, and you got to think it's going to pay off. It may not pay off in a perfect amount, but it's certainly going to pay off. Andy. And your demand, your your consumer demand chart is basically saying that and showing one of those great divergences between the stock price and the actual demand here. Yeah, I think it is. It's clear to us that it is. You know, I think it's clear to Google alphabet executives as well. You know, when they talk about their customers on the cloud side are spending at 50% above their permitted levels and are telling Google Alphabet, we can't get enough. We've got now we've got a backlog, you know, of, of a half $1 trillion of revenue is what Google's telling the street. There's the idea that this is slowing down rather than speeding up. Just flies in the face of all of the data that we are seeing. All of the anecdotes that I get from friends who are in the metalworking business and saying, you know, they're getting contracts from Google, meta alphabet alphabet Microsoft for hundreds of millions of dollars just for exhaust pipes to go off of the generators that they're planning to build over the next 3 to 5 years. There's no slowdown in sight to this. There's no slowdown when you talk to, you know, the vibe coders. Everybody involved in this is spending more and getting more return than than they have three months ago, six months ago, etc. and they don't really see a slowdown. So I think these talking points about a slowdown or these companies coming out and saying, we need to pace the frontier, I think it's time to just ignore that. Let's look at what people are actually doing. Let's look at what companies are actually spending. Let's look at what they're committing to into the future. There's no slowdown in sight. And as much as these CEOs want to talk about pacing themselves and, and, and trying to vie for regulatory capture, at this point, I don't think it's going to work. And I think that the arms race is just heating up in AI. And all of these companies benefit up and down the line. There's a massive amount of money moving into this and for very good reason, Andy, when you look at that chart, that's the consumer demand story there. And the growth trajectory there. Is that about interest in Gemini, or is it about, you know, what alphabet Google is doing with regard to AI and AI infrastructure? Is it for Google search? You tell us. Yeah, it's the growth is coming from Gemini. And you know, I think Gemini has fallen behind in terms of just the the amount that people talk about these different platforms. But, you know, when you really get down into it, Gemini has a phenomenal product that just hasn't penetrated the consciousness. Claude is getting a ton of attention right now. But to bet against Google Alphabet at this point is like betting against them. You know, in 2000, 2001, when search and advertising search was just getting started, I think it's a huge mistake. And so Gemini is starting to take off the data center side of the business in terms of consumer or business demand is taking off and really carrying things. I think Google is falling a little bit behind. Microsoft Azure is, you know, in our data is pacing at the highest level. But Google's investments into Alphabet's investments into infrastructure build out are going to help close that gap. And they're going to be one of the leaders in this. And there's going to be multiple winners come out of this. And I, I strongly expect that alphabet will be one of those big winners. Well, listen, investors are clearly putting their chips on the table for alphabet Google today. Thank you Andy. Appreciate that