In this episode, Ben and Jay discuss the significant surge in capital expenditure (CapEx) among major tech companies, dubbed &#x27;CapEx Palooza.&#x27; They explore investor sentiment and market reactions to these expenditures, the implications of backlogs and demand in the tech sector, and the future of AI and cloud services. The conversation also delves into the dynamics of CapEx spending among hyperscalers, emerging trends in semiconductor mergers and acquisitions, and the impact of rising memory prices on consumer electronics. Additionally, they highlight the strategic acquisition of Silicon Labs by Texas Instruments and the potential of timing technologies in the market. The episode concludes with an announcement about their upcoming live stream.

EP 152: CAPEXXXXXX!!!! The Trillion Dollar Datacenter Race and More

The Circuit

# Full Transcript

**Podcast:** The Circuit

## Participants

- **Ben Bajarin** (The Circuit)
- **Jay Goldberg** (The Circuit)

## Transcript

Hello everyone, welcome to another episode of The Circuit, I'm Ben Bajarin. Greetings Program's, I'm Jay Goldberg. All right Jay we are on CAPEXXXX to the moon part 3, otherwise now being shared around investor circles as CAPEXXXX users. It's all bigger. Bigger than we thought. Microsoft obviously,

as we talked about before, guiding up was big. Google now saying $175 to $180 billion and now Amazon saying $200 billion. And that's just after the first quarter. These numbers can, of course, go up through the roof. And what's interesting, and we kind of touched on this, and this was just last week with Microsoft, this is a continuation of that. But investors apparently don't like it,

despite significant backlogs, backlogs that are larger than their CapEx numbers. Yes, we could talk about what this means for free cash flow and operating profit, et cetera. But I think the reaction is interesting. I see all this debate and sort of controversy where people are like, but they're saying they've got 200 and something plus backlog and a billion backlog. And that's, sure, they should spend,

but man, the stocks are not being generous. Oh, no, no, no, no. That was yesterday. It's still down today, isn't it? We're recording Friday, February 6th, and apparently everything is great today because yesterday everything was terrible, but that's all over. Now things are great. Well, okay, sort of, not the clouds. Amazon still, as of this moment, 7%. Google off 2%. Microsoft 0.91 up, so flat.

But you're right. In 70s land, not too bad, which, again, is a relevant part of what we're talking. But I just find it interesting that the hyperscalers are essentially taking the brunt of some negativity when, again, all of their commentary was, we got way more demand, we need to build more space, we need to spend to capture the long backlog we have of customers. Yeah, I mean, I'm joking.

There are a lot of strong feelings in the stock market right now that are, like, I feel like I'm talking to a toddler. Like, the stock market's a toddler. We got strong feelings. Let's not get our neighbors. Oh. Yeah. I think it's very confusing. I mean, we saw a little bit of this last week with Microsoft and Meta, that dichotomy.

The CapEx numbers out this week were huge. I think, you know, you think back a year ago, if any of these companies had cut CapEx, their stock would have been down. Right. And now, I think we're getting to a little bit more, we're trying to get a little bit more common sense to this, which is investors want to say, oh, investment is good for the future, but we need to have some path

to that actually being a return. And stock market being the stock market, we're sort of substituting 90-day cycles for multi-year cycles, and that's causing a lot of confusions. And I, I, but, you know, it's, the CapEx numbers are massive. And ...

EP 152: CAPEXXXXXX!!!! The Trillion Dollar Datacenter Race and More

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

EP 152: CAPEXXXXXX!!!! The Trillion Dollar Datacenter Race and More

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.