AI stocks are on the move after hours. The primary catalyst is earnings from Alphabet (Nasdaq: GOOGL | GOOGL Price Prediction).
While Alphabet shares are off nearly 7%, there was news in their earnings release that is very good for a group of other companies. Specifically, Alphabet forecast capital expenditures of $75 billion in 2025. That number is significantly ahead of the amount of spending Wall Street expected the company to announce.
Google’s data center plans in 2025 could be a massive boon to stocks like Broadcom (Nasdaq: AVGO) and Celestica (NYSE: CLS). Let’s dive into the details of just how big data center spending plans are relative to recent expectations and why certain stocks could soar tomorrow even if Google’s stock drops.
Big Tech Companies Are Announcing Massive AI Spending Plans for 2025
While stocks supplying the infrastructure for data center build-outs plummeted last Monday over fears China’s DeepSeek would lead to lower spending, large AI companies continue putting their foot on the accelerator.
As of the end of the third quarter, here’s where Wall Street expected data center spending (total capital expenditures) from major tech companies in 2025:
- Amazon: $85 billion
- Microsoft: $84 billion
- Google: $57 billion
- Meta: $48 billion
- Oracle: $14.4 billion
Since the start of November, we’ve seen expectations for spend dramatically increase.
- Amazon reports this Thursday (February 6th), so we’re still waiting for updates on their spend.
- Microsoft already reported earnings and said its growth rate on data center spend would ‘decelerate’ next fiscal year, but a deceleration was already expected.
- Google tonight projected $75 billion in capital expenditures this year, that’s 32% ahead of expectations.
- Meta forecasted capital expenditures of $60 to $65 billion in 2025, that’s 30% above Wall Street’s expectations.
- Oracle joined OpenAI’s Project Stargate, which will lead to more investment in AI data centers.
Add it up, and these five companies are now expected to spend at least $320 billion in capital expenditures next year. That number is likely to rise as Oracle updates its capital expenditure numbers after joining Stargate and Amazon reports on Thursday.
Google’s Announcement Could Boost Celestica and Broadcom
With Google reporting tonight, companies that gain outsized revenue from the company will be in focus tomorrow. Here are some stocks that could be up big tomorrow.
Broadcom is up 4% after-hours. The company has a longstanding relationship with Google designing their TPUs.
TPUs are custom processors built specifically for Google’s data centers. Broadcom is now looking to replicate this relationship in deals with Meta Platforms, ByteDance, Apple, and OpenAI. In Broadcom’s most recent earnings call, they projected a ‘Serviceable Addressable Market’ of $60 to $90 billion from their top customers (Google, Meta Platforms, ByteDance).
However, Google is Broadcom’s largest customer, so their announcement today will likely mean the company exceeds Wall Street’s revenue expectations in 2025.
Another company to watch is Celestica. The company reported earnings last week and the highlight was 2025 guidance that was way ahead of what Wall Street expected. EPS projections of $4.75 were significantly above Wall Street’s expectations of $4.48.
With Google projecting capital expenditures well above Wall Street’s estimates, it’s now clear why Celestica’s guidance for this year was so strong. The company has a strong relationship with Google, and given the strength of Google data center plans, is likely to exceed even the projections that led its stock to soar following earnings.
In after-hours trading Broadcom is up 3.5% while Celestica is up 4.2%.
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