Prof G Markets – "Google Goes All-In on the AI Arms Race"
Date: February 11, 2026
Hosts: Ed Elson, Gil Luria
Key Guests: Doug O’Laughlin (President, SemiAnalysis)

Episode Overview

In this episode of Prof G Markets, Ed Elson and Gil Luria dissect the seismic shifts in tech and capital markets driven by generative AI, focusing on Google’s record-breaking corporate debt issuance and the escalating “AI arms race” among tech’s biggest players. The conversation stretches from the tactical and strategic motives behind Google’s $32 billion bond sale to the knock-on effects in the chip market, and finally to growing public and political resistance to AI’s rapid expansion.

1. Big Tech’s Debt-Fueled AI Arms Race

Google’s Monumental Debt Offering ([02:13–04:19])

• Key Fact: Google raised nearly $32 billion in debt in less than 24 hours—the largest in its history, among the biggest ever by a corporate.
• Orders exceeded $100 billion for the US dollar tranche; included a rare 100-year bond.
• Coincided with an announced doubling of Google’s 2026 CapEx, part of a broader Big Tech commitment: Amazon, Google, and Microsoft will spend a combined $660 billion on AI infrastructure in 2026—a 60% increase year over year.

Gil Luria (DA Davidson, guest) on Why This Matters ([04:19–06:18])

• “Google has plenty of cash…They can cover all of their CapEx needs with the cash flow they have…But they’re choosing to borrow money to create more capacity. This is very low-cost borrowing for them, and it aligns them with where they need the cash.” – Gil Luria [04:21]
• The 100-year bond serves as a “signal”: Big Tech is telegraphing their long-term commitment, intending to “outlast everybody.”
• Industry context: Meta’s Mark Zuckerberg also making massive CapEx outlays (“forget he paid $14 billion to hire Alexander Wang”)—the giants are determined to win at any cost.

Risks and Competitive Dynamics ([06:18–07:46])

• “It’s a concern for whoever loses. Whoever wins, all this CapEx will have been great. [If] there’s any losers in that group, they’re going to be stuck with a lot of infrastructure they’ll have to sell at a discount.” – Gil Luria [06:50]
• For megacaps (Google, Microsoft, Amazon), taking on debt isn’t a sign of weakness, but a show of financial strength—a “flex.”
• The banks “always prefer lending money to the companies that don’t need to borrow.”

2. Market Reaction and Implications for Oracle, OpenAI ([07:46–11:12])

• Google’s debt move resulted in only a “tepid” stock reaction, unlike Oracle’s recent bond raise, which led to a 9% crash.
• “Google has the cash and the cash flow to support paying back that interest for a very long time.” [08:11]
• Oracle, by contrast, is “really stretched right now”—had committed to a massive infrastructure buildout without the same balance sheet safety net. However, anticipated cash from OpenAI (if it succeeds in a $100B raise) could bail out Oracle.
• DA Davidson upgraded Oracle to a “Buy” after its stock fell and OpenAI re-focused. “Now it looks like OpenAI will be able to pay those Oracle bills and again bail Oracle out of a very tough situation.” – Gil Luria [09:40]

3. Is “Software Dead”? The AI Disruption Debate ([11:12–13:27])

• “AI is a major disruptive force in all of technology and the whole economy. And specifically for software…What happens when you have major disruptive forces is that excellent companies and good businesses execute well and win, and companies that are not very good…fall by the wayside.” – Gil Luria [11:51]
• Recent turbulence in software stocks created bargains: “You had an opportunity last week to buy unbelievable companies like Snowflake and Datadog at 35 times cash flow. Microsoft at 20 times earnings because of this onslaught on all of software.”
• The correction is seen as an opportunity: “We love that because that’s what creates opportunities.”

4. Memory Chip Market Mania: Demand, Cycles, and AI ([15:53–23:29])

Guest: Doug O’Laughlin, President, SemiAnalysis

Explaining Memory Chips ([16:51–17:53])

• Memory = DRAM (volatile, fast) and NAND (non-volatile).
• New star: HBM (High Bandwidth Memory).

The Current Supercycle ([17:53–19:25])

• “We are in what is probably the most historic memory cycle of all time. Demand specifically from AI has skyrocketed…when you have a bad memory cycle, your desire to spend on new capital equipment is very low…And then boom, a giant demand vector hit the industry.”
• AI data centers have created a “perfect supply-demand mismatch”—no new capacity online in time to meet demand, so memory prices are up 100%.

Knock-On Effects and Stock Projections ([19:25–21:29])

• This mirrors energy market dynamics. “We think the biggest bottleneck in the market right now today is memory.” – Doug O’Laughlin [20:29]
• DRAM and NAND prices are driving consumer electronics costs higher.
• “That’s how you think about it: I would expect [memory stocks] to continue to do well, but maybe not at the past rate. They’ve done well, especially out of the worst cycle of all time into the best cycle of all time.” – Doug O’Laughlin [23:23]

5. The Anti-AI Backlash Intensifies ([23:40–27:08])

AI’s Popularity Problem ([23:40–26:45])

• AI’s hype is everywhere: “If you watched the Super Bowl…1 in 4 of the ads that were aired featured AI in some capacity.”
• But public support is weak:
  • Over 80% of Americans “concerned” about AI.
  • More than 75% fear it “could pose a threat to humanity.”
  • Less than half currently have a favorable view of AI.
• “AI is broadly unpopular in America. Now, to be fair, this happens a lot with new technologies…But we should also recognize it’s getting to the point where AI is so disliked that now actual obstacles are being put in place.”

Political and Community Pushback ([26:45–27:08])

• Politicians (notably Ron DeSantis) proposing data center construction bans.
• “You look at OpenAI’s new Stargate data center, for example…that’s going to employ about 100 people. That is roughly a third of the number of employees at a standard Walmart location…Meanwhile, electric bills are indeed going up in areas where data centers have been built—the price of electricity has risen roughly 250% over the past five years.” [27:08]
• Legal and political resistance in Michigan, Arizona, Virginia, Georgia, with proposals ranging from restrictions to outright bans on data centers.

The Big Open Question

• Ed Elson: “The biggest conversation we’re not having is: how many people actually want this?...What does America disliking AI actually do to valuations? What does it do to earnings? What does it do to cash flows?…Ultimately, the answers…will determine the future of AI. Like any other product, its success will be a function of how many people like it. And increasingly that number is going down.” [27:08]

Notable Quotes & Moments

• Signaling through financial might:
  “By issuing a hundred-year bond, [Google is] saying we’re in it for the long haul.” – Gil Luria [04:37]

• On the risks of being an ‘AI arms race’ loser:
  “Whoever wins, all this CapEx will have been great. [If] there’s any losers…they’re going to be stuck with a lot of infrastructure they’ll have to sell at a discount.” – Gil Luria [06:50]

• On the popularity of AI:
  “AI is broadly unpopular in America. Now, to be fair, this happens a lot with new technologies…But we should also recognize it’s getting to the point where AI is so disliked that now actual obstacles are being put in place.” – Ed Elson [25:30]

• On data centers:
  “These hyperscale data centers use as much power…as a city of half a million people. Once it is built, the local community doesn’t really benefit from it. It’s a robot that’s building shareholder value for people who own AI stocks.” – Ed Elson [26:53]

Timestamps for Key Segments

• [02:13] – Google’s record $32B bond raise and significance
• [04:19] – Gil Luria unpacks Google’s motives and strategic context
• [06:18] – CapEx risks and the “winner take all” nature of AI
• [07:46] – Stock market reactions to Big Tech vs Oracle debt
• [09:40] – Why DA Davidson upgraded Oracle
• [11:12] – The “software is dead” debate in the AI era
• [15:53] – Memory chip boom with Doug O’Laughlin
• [17:53] – Supply/demand mismatch and AI-driven supercycle
• [19:25] – RAM prices, consumer impact, and stock outlook
• [23:40] – American skepticism and political resistance to AI
• [26:45] – Data center backlash: energy, jobs, politics

Conclusion

This jam-packed episode charts the latest phase of the Big Tech AI arms race, with Google’s historic debt raise as a catalyst for broader industry shifts. Meanwhile, the show connects the dots between soaring capital investment, supply chain tremors (especially in memory chips), and the mounting social and political resistance to AI’s unchecked expansion. The tone is sharp, analytical, and at times wary—raising the pressing question of whether the financial “leg” of this AI race is running too far ahead of public sentiment.