00:00 Josh
Big tech is now on deck. What do you expect there? You think beats, raises? Do they tell us that AI CapEx keeps going higher? What do you think?
00:08 Speaker B
Yeah, well, I think Wednesday is the week of this week because Wednesday you’re going to hear from Alphabet. And really, I think all investors really care about is are you continuing to see rapid cloud growth? Are they monetizing their vertical integration that that they have? And what is CapX going to look like? And I think what the market really needs to see is almost a Goldilocks scenario. Probably a slight increase to the CapX numbers, that’ll help all of the semiconductor complex, but also moderated spend, and I think that should help allow a company like an alphabet to continue or really I should say reverse it’s uh its kind of middling trend over the past few months.
00:46 Josh
If they if they were to kind of even slightly raise CapX, I’m curious what you think might happen to the chip trade. I mean, obviously there’s been a sell off there and some people, we were talking off camera about this, parabolic moves. Some people said, listen, you’re just letting out some steam. But I wonder if if Big Tech comes out even slightly raises, you think money flows back into chips?
01:06 Speaker B
I think so. I think you need to have a slight raise. If these companies don’t raise their guidance, I think that’ll be disastrous for some of these companies because they’re already sitting at some really critical technical levels. So if there’s a reason for a deeper sell off, you could see the likes of Micron, Sandisk, etc. collapse probably another 15, 20% before they start to find the bottom. But I don’t think that’s going to happen. I think we’ll continue to see these companies wrap up, ramp up their CapX. I’m expecting 2027 numbers to be north of a trillion dollars. So
01:54 Josh
North of a trillion?
01:55 Speaker B
North of a trillion dollars because a lot of these companies are monetizing. They are monetizing the dollars they’re spending. You’re seeing rapid growth of the cloud businesses. And when you actually listen to what management teams are saying, Josh, most of them are saying the only reason we maybe didn’t beat our numbers is because we’re capacity constrained. So they have to make these investments. And so you’re going to spend, you know, $2 trillion dollars to be able or, you know, you’ll spend a trillion dollars to capitalize on a $2 trillion dollar backlog of cloud service agreements. That to me seems like money well spent.
