Bloomberg Intelligence Podcast

Episode: Big Tech to Spend $650 Billion This Year as AI Race Intensifies
Date: February 6, 2026
Hosts: Scarlet Fu & Paul Sweeney

Episode Overview

This episode dives deep into the spike in capital expenditures (CapEx) by Big Tech as the industry pours unprecedented sums into artificial intelligence (AI) infrastructure. Kicking off with Amazon’s staggering $200 billion announcement and capex plans across hyperscalers, the hosts and Bloomberg Intelligence analysts explore investor sentiment, the sustainability of this spending, and how it reflects the evolving AI landscape. The episode then pivots to earnings and strategic moves in the consumer retail, tobacco, and finance sectors, with expert commentary on Under Armour’s turnaround and Philip Morris’s smoke-free future. The show wraps with an insider’s look at the Wall Street bonus season and compensation trends.

1. Big Tech CapEx & AI Infrastructure Race

[00:24] – [05:34]

Key Discussion Points

• Amazon’s CapEx Shocker

  • Amazon announces $200 billion in capex, shocking markets and causing a stock dip despite strong AWS numbers.

    "This was as big as it can get in terms of, you know, a capex number out of the hyperscalers... had they not gone that big, the stock would have been up."
    — Mandeep Singh, [00:57]

  • The magnitude of spending, rather than operational growth, concerns investors, especially as margins compress.

  • Capex is up about 55%, part of a broader trend with aggregate Big Tech capex rising from $200B to $650B.

• Peak Growth?

  • Mandeep Singh suggests this year is likely “peak capex growth,” with future increases moderating but still substantial.

    "We have gone from $200 billion of hyperscale CapEx to now $650 billion. I think that growth rate will certainly come down, but there's no doubt that we are still in that part of the S curve..."
    — Mandeep Singh, [01:55]

• Investor Anxiety & Leap of Faith

  • Investors show anxiety and even panic about potential hits to free cash flow.

    "You have to take a leap of faith that all these companies that are putting, you know, $200 billion will see ROIC for their spend..."
    — Mandeep Singh, [03:11]

  • The requirement for large, upfront investment to build AI infrastructure has disrupted predictable cash flow models.

  • Uncertainty exists over whether AI investments will deliver adequate returns on invested capital (ROIC), especially as only a handful of foundation model players may capture the bulk of demand.

• CapEx Flexibility & Rival Strategies

  • CapEx levels are “squishy;” companies can adjust plans rapidly depending on demand and supply chain reality.

  • Google’s increased capex aligns with greater cloud demand (boosted by customers like Apple and Anthropic), while Apple has mostly resisted similar spend.

    "A company like Apple so far has resisted the urge to spend on capex, and now that they are leaning on Google... Google's raising capex made a ton of sense this earnings season..."
    — Mandeep Singh, [04:40]

2. Under Armour’s Turnaround – Low Bar, Tough Road

[05:56] – [08:51]

Key Discussion Points

• Under Armour Pops, Challenges Remain

  • Stock jumps 11% on “respectable” earnings but underlying metrics (e.g., North America sales down 10%) keep analysts cautious.

    “The bar was very low for Under Armour... I'm still not completely sold on the story.”
    — Poonam Goyal, [06:22]

  • Loss of Steph Curry as a brand ambassador is materially negative, affecting Under Armour’s basketball ambitions.

    "The loss of Steph Curry is going to be a headwind, we estimate... it's more than a $100 million franchise."
    — Poonam Goyal, [07:17]

• Fairfax Financial’s Stake

  • Fairfax now holds approximately 22% of Under Armour, possibly steering upcoming strategic changes.
  • Under Armour is executing a classic retail turnaround—cutting off-price, pushing innovation, but still faces tough comps and needs effective branding without star athletes.

3. Amazon Retail, AI, and the Consumer

[08:51] – [10:56]

Key Discussion Points

• Retail Momentum & AI Innovations

  • Amazon’s retail business continues to gain share with impressive low double-digit online sales growth.

  • Flagged for its AI-driven services like “Rufus,” which can execute automated purchase orders based on user criteria.

    "What's really neat about their retail business right now is all the investments that they're making in AI, especially Rufus... that's a new way to shop."
    — Poonam Goyal, [09:00]

• Prime Benefits & Everyday Essentials

  • While Prime prices have climbed, value remains strong due to bundled offerings and new services.
  • Everyday essentials now represent $150 billion GMV, about one in three Amazon purchases.

• Health of the Consumer

  • Consumers are “doing just fine,” still spending but more judiciously—a dynamic benefiting scale players like Amazon.

    "We have been waiting to see if the consumer will crack. We haven't seen that yet. The consumer is shopping but they are being mindful..."
    — Poonam Goyal, [10:56]

4. Philip Morris – Betting Big on Smoke-Free Future

[11:37] – [15:53]

Key Discussion Points

• Solid Quarter & Positive Guidance

  • Delivered in-line Q4 sales/EPS; stock rewarded for meeting expectations and setting strong guidance for 2028:

    "They see mid to high single digit revenues, around 10% operating income, low double digit EPS growth..."
    — Ken Shea, [11:57]

• Transparency & Strategic Shift

  • Company increasing reporting detail on its smoke-free businesses, which are already 42% of total sales.
  • IQOS (heated tobacco devices) leads in Japan, South Korea; also pushing nicotine pouches (“Zimbabwe”) and e-cigarettes (Vive).

    "Philip Morris has really took a big step before its peers... with what it's calling iqos... it's already comprised more than half its sales in some pretty big markets..."
    — Ken Shea, [13:29]

• Potential for Business Separation

  • Discussion of possible future separation between smoke-free and traditional combustibles given differing investment profiles.

5. Wall Street Bonus Season – Strongest in Years

[16:13] – [21:49]

Key Discussion Points

• Bonus Pools Climb on Strong Year

  • Goldman, JPMorgan, and others expected to increase bonus pools by at least 10%, with rainmakers seeing 20–30% boosts.

    “The year ahead looks to be the momentum in terms of deals and trading. Both of those things is feeding into that bonus pool that you talk about.”
    — Catherine Daugherty, [17:10]

• Comp Structure Shifts

  • Base salaries now compose a larger share of total comp, but bonuses remain the key motivator.

  • Bonuses are performance-driven and increasingly used for talent retention, even as firms control expense scrutiny.

    "The shift is still towards bonus over salary for many of these firms. And again that is why there's the incentive to work hard. That phrase of eat what you kill."
    — Catherine Daugherty, [19:50]

• US vs. European Banks

  • US banks pay more; European salaries lower, reflecting business mix and profitability.

6. Notable Quotes

• On CapEx & AI Bets:

  "You have to take a leap of faith that all these companies that are putting, you know, $200 billion will see ROIC for their spend."
  — Mandeep Singh, [03:11]

• On Amazon’s Retail & AI:

  "What's really neat about their retail business right now is all the investments that they're making in AI, especially Rufus..."
  — Poonam Goyal, [09:00]

• On Under Armour’s Hurdles:

  “I'm still not completely sold on the story... repeating the same turnaround narrative.”
  — Poonam Goyal, [06:22]

• On Smoke-Free Future:

  "It's already around 42% of their sales. Yeah, believe it or not, not a lot of people in the US know about it because iqos really isn't sold in the US yet."
  — Ken Shea, [15:11]

• On Wall Street Bonuses:

  "The shift is still towards bonus over salary for many of these firms. And again that is why there's the incentive to work hard."
  — Catherine Daugherty, [19:50]

7. Timestamps for Major Segments

• [00:24] Big Tech CapEx & Amazon’s AI Spend
• [01:41] Peak CapEx Growth and Investor Uncertainty
• [03:11] Institutional Investor Sentiment on AI & CapEx
• [04:40] CapEx Levers, Google/Apple Cloud Dynamics
• [05:56] Under Armour’s Earnings and Fairfax’s Stake
• [07:17] Impact of Losing Steph Curry
• [08:51] Amazon Retail Growth and AI Innovations
• [09:54] Prime Fee Structure and Consumer Health
• [11:37] Philip Morris’s Q4 and Smoke-Free Business Shift
• [15:53] Potential Business Separation at Philip Morris
• [16:13] Wall Street Bonus Season – Trends & Comparisons

Summary Takeaways

This episode captures the urgency and scale of tech’s AI arms race, investor cynicism about returns, and the implications for related sectors. While Big Tech’s $650 billion bet could change global operations, questions abound about who will ultimately benefit. Elsewhere, legacy players like Under Armour and Philip Morris are striving for relevance in changing markets, and Wall Street’s perennial bonus season provides a familiar, if evolving, spectacle.