Jordi Visser
Head of AI Macro Nexus Research at 22V
The most hated bull market around the greatest innovation ever is building anger that may land on data centers. Agents have not replaced workers, but companies have stopped hiring, freezing the corporate ladder while city living costs stay the same; with hope taken away, someone gets blamed, potentially data centers. Robots and agents will be taxed. Founders will own 80-100% of their businesses because AI removes the need for employees and borrowed capital. feeds.fountain.fmÂ
Alphabet, Meta, Microsoft and Amazon are being sold to fund the rotation into AI names, and these big spenders keep seeing their multiples compress. An equal-weight basket of the four has broken to its lowest level relative to the S&P 500 since early 2024 and is having its second-worst relative month in a decade heading into quarter-end. x.comÂ
Alphabet's AI capex payback is being repriced, making its post-earnings decline more than a one-day mood swing. Guidance and cloud and AI margin commentary are the near-term tests. If growth continues but the multiple compresses, the risk is duration in mega-cap AI, not a collapse in technology growth. x.comÂ
Alphabet's AI Mode monetizes less effectively than traditional Search, potentially threatening its Search business. AI drove the fastest Search query growth in five years, yet Search revenue growth slowed to 12%; defending Search makes even greater AI investment necessary, not optional. Google Cloud grew 103% year over year to a $123 billion annual run rate. The report could not have been better for the AI infrastructure trade, but its risks are bearish for Alphabet's stock. x.comÂ
Alphabet's search monopoly faces a different competitive game as agent companies build their own search tools. Google Cloud grew 103%, but that was not enough to offset disappointing ads growth. Its only path is to accelerate AI training and keep spending on capex. Search will never be the same, and the risk-reward has changed, though Alphabet remains an optimistic prospect. x.com x.com x.comÂ
AI answers cost Alphabet more to serve than traditional search results, adding a bigger bill to the risk of fewer ad clicks. Higher prices per click could offset some lost clicks, but growing capex has pushed free cash flow negative; the 2027 spending concern is not going away. x.com x.com x.com x.com x.com x.comÂ
AI suppliers' profits and signed demand distinguish this buildout from dotcom overcapacity. AI leaders rose 2.9x on 3.1x earnings growth versus 7.4x on 2.1x before 2000; cloud providers have $2.3T in signed backlog. Alphabet, Microsoft, Amazon and Meta could repay debt with about six months' cash flow, unlike 2008's leveraged banks. Micron has multiyear take-or-pay deals and ASML has orders years ahead. Memory profits are cyclical; TSMC, ASML and GE Vernova remain favored in AI's early innings. … Show more
AI embedded throughout software could bring huge future token spend to Amazon and Alphabet, whose AWS and GCP clouds host software builders and offer AI platforms. Ramp data show VC-backed firms spend 10 times more per employee on AI monthly than PE-owned and other firms, a possible leading indicator of software using more tokens relative to people. VC-driven demand is vulnerable to capital-cycle swings, but longer term incumbent software may become AI-native or be replaced. x.comÂ
Alphabet, Microsoft, Meta and Amazon will now have to answer on AI monetization after the Street gave them leeway on capex. Alphabet's latest report changed that, and the others won't get a pass this time, since investors only go along for so long. @RealSimpleAriel warns that Nvidia financing OpenAI, which then buys more Nvidia chips, is circular, and an unwind could hit the broader market. x.comÂ
Amazon, Alphabet, Microsoft and Meta are not getting cheap; their multiples are sliding because separate monopolies are turning into one competitive market. They now spend enormous sums to sell the same AI to the same customers, funded largely by cyclical ads, on unproven returns. Microsoft faces AI eating per-seat licensing, Amazon fights in both retail and cloud, Alphabet's search premium is gone, and Meta keeps going all in for less. Markets can't price not knowing what a business will be. … Show more
Alphabet's AI spending is visibly turning into revenue, more than many other names can say today. Cloud is nearly a quarter of revenue, growing 103% at a 36% operating margin with a $561B backlog; total revenue rose 25%, operating income 30%, and margins are expanding. Free cash flow has been negative for two quarters, capex keeps climbing into 2027, and AI leaves search monetization uncertain. x.comÂ
More SpaceX compute capacity could hurt Google, Amazon and Microsoft's AI compute businesses by adding competing supply for Anthropic and other labs. Musk said on a SpaceX call he is fairly confident it can bring an incremental 10GW online in 2027; if it can, that is probably bad news for the major hyperscalers. x.comÂ
