Tech Earnings: Google’s Spending, Arm’s AI Data Center Push | Bloomberg Tech 2/5/2026

Bloomberg Tech - Broadcast Summary (April 26, 2024)

Key Concepts:

• Market Correction: Significant sell-off in tech stocks and broader markets, impacting NASDAQ, S&P 500, and Dow Jones.
• Software Sector Weakness: Software stocks experiencing a particularly sharp decline, hitting record oversold levels.
• Crypto Volatility: Bitcoin falling below $70,000, impacting the broader cryptocurrency market and leading to workforce reductions at Gemini.
• Capital Expenditure (CAPEX) & AI Investment: Google’s massive $185 billion CAPEX plan, driven by AI infrastructure build-out, and its implications for other tech companies like Amazon.
• Memory Shortage: Constraints in memory supply impacting smartphone production and Qualcomm’s revenue forecast.
• Qualcomm Diversification: Qualcomm’s strategy to expand beyond handsets into automotive, robotics, and data centers.
• AI & Enterprise Software: The potential disruption of AI to established enterprise software providers like LexisNexis and Westlaw.

1. Market Overview & Tech Sell-Off

The broadcast opened with a snapshot of significant market declines. The NASDAQ Composite was down 1.4%, its lowest level since November. A broad-based sell-off was observed across asset classes, with software stocks leading the decline, down 15% this week and 29% from their September highs. The share of software stocks considered “oversold” reached an all-time high of 70% yesterday, with the iShares Expanded Tech Software ETF being the most oversold relative to the S&P 500 ever recorded. The risk-off sentiment extended beyond tech, with the S&P 500 down 1.2% and the Dow Jones Industrial Average also falling 1.2%. Bitcoin fell below $68,000, a low not seen since November 2023, representing a 45% drop from its October high. Gemini announced plans to cut 25% of its workforce.

2. Alphabet’s CAPEX & Market Reaction

Alphabet (Google’s parent company) announced a fiscal year CAPEX forecast of $185 billion, significantly exceeding the Street’s expectation of just under $120 billion. This substantial investment, largely attributed to AI infrastructure, led to a nearly 5% drop in Alphabet’s stock price. The discussion centered on whether this massive CAPEX signals a shift in investor expectations, moving away from immediate free cash flow and towards long-term growth potential. Ayako noted that while the cloud business is growing at 48%, the CAPEX spend is causing investors to recalibrate valuations.

3. Qualcomm Earnings & Outlook

Qualcomm reported record revenue and royalties ($1.24 billion revenue, $740 million royalties, up 27% year-over-year). However, the company’s guidance for the current period, forecasting sales of $11 billion, triggered an 8% stock drop. The primary concern is the impact of the global memory shortage on handset production and pricing. CEO Cristiano Amon emphasized that while the memory shortage is impacting the size of the handset market, demand remains strong, particularly in the premium segment. He stated the memory situation has had minimal impact on Qualcomm’s business due to its diversified portfolio and focus on the premium tier. Amon highlighted the rapid growth of Qualcomm’s data center business (over 100% year-over-year) and predicted it will become the company’s largest business in a few years. He pointed to the increasing adoption of ARM CPUs in data centers, with over 50% of hyperscalers now utilizing them, and the growing number of cores in chips like Graviton (182 cores). He anticipates the inflection point where data center revenue surpasses handset revenue will occur sooner than previously expected.

Notable Quote (Cristiano Amon): “The fundamentals of the company are incredible. We are just navigating to another phone cycle.”

4. AI’s Impact on Enterprise Software

The segment discussed the potential disruption of AI to established enterprise software companies. Anthropic’s Claude legal tool was cited as an example, with Bloomberg Intelligence’s John Davies arguing that generic AI tools lack the deep data access and specialized knowledge of incumbents like LexisNexis and Westlaw. Davies emphasized the importance of “shoe leather” – the extensive research and contextual understanding required in legal work – which AI currently struggles to replicate. He noted that while AI could potentially lower costs, it’s unlikely to replace the expertise of established legal databases. The discussion also touched on the potential for AI-powered tools to gain traction if they can access proprietary data and avoid “hallucinations” (generating incorrect information).

Notable Quote (John Davies): “The key thing is that these generic tools don't have access to the vast pools of data which the very specialized tools which the established companies have access to or built up over many decades.”

5. Snap’s Challenges & User Decline

Snap Inc. reported better-than-expected holiday sales and rising paid subscribers, but its stock fell over 8% due to a 9% decline in daily active users in the United States. Emarketer’s Mindy Smiley attributed this decline to Snapchat’s difficulty attracting users outside its core Gen Z demographic, as competitors like TikTok and Instagram aggressively court younger audiences. The delayed partnership with Perplexity (an AI search engine) also raised concerns, with investors questioning its potential impact and integration into Snapchat’s platform. Smiley expressed skepticism about the long-term viability of smart glasses, despite Snapchat’s history in augmented reality.

Notable Quote (Mindy Smiley): “Snapchat is distinct in the social media landscape, which in some ways has worked to its advantage, but has also hurt it.”

6. Amazon & Market Anticipation

The broadcast highlighted the market’s anxiety ahead of Amazon’s earnings report, particularly in light of Alphabet’s substantial CAPEX announcement. Investors are bracing for a potentially significant increase in Amazon’s CAPEX spend, anticipating around $125 billion in 2026, a 22% increase from 2025.

7. Other Tech Earnings & News

• Sony: Reported a 22% rise in profits, securing sufficient memory supply for PlayStation 5.
• Honhai (Foxconn): Saw a 35% revenue increase, benefiting from the AI hardware boom.
• Peloton: Provided a weaker-than-expected revenue forecast, despite investing in AI-powered products.
• SpaceX: Holding meetings with banks outside the U.S. for its IPO.
• Nvidia: Partner Honhai saw a revenue increase of 35% due to the AI hardware boom.

Synthesis/Conclusion:

The broadcast painted a picture of a tech sector undergoing a significant correction, driven by concerns about high valuations, rising capital expenditures, and broader macroeconomic factors. While companies like Qualcomm are demonstrating resilience through diversification and strong performance in emerging areas like automotive and data centers, the memory shortage and the uncertainty surrounding AI investments are creating headwinds. The market is closely watching Amazon’s earnings for further clues about the direction of the tech sector and the sustainability of the AI-driven investment boom. The overall sentiment is cautious, with investors recalibrating expectations and seeking clarity on the long-term implications of these trends.