# AI CapEx Arms Race: Winners and Losers

**Podcast:** Motley Fool Money
**Published:** 2026-02-09

## Transcript

Big tech is spending big.
Who could lose amid all the winning?
You're listening to Bobby Fool Money.
Welcome, Fools.
I'm your host, Tim Byers, and with me are two top fool contributors and recurring guests.
It's Travis Hoyam, Jason Hall.
Thanks for being here, Fools.
How you feeling?
Good.
This is a wild market.
This is one of the crazier markets that I've seen.
We're near all-time highs, and yet we've got some stocks that are just getting absolutely crushed.
Kind of kind of crazy.
Yeah, and there's a lot of investors trying to figure out which part of the market is right.
To that point, Jason, let's talk about two that are on the radar this morning.
As we are taping, this is on Monday late morning Mountain Time.
Uh both Monday.com, ticker M N D Y and Kindrel, ticker KD, are getting absolutely slaughtered.
Uh Monday has been down more than 20% through various parts of the day.
Kindrel down more than 50%.
These two are a little different, though.
We'll talk about Monday in a second, but just the story on Kindrel is the CFO and the general counsel uh both appear to have been dismissed.
Kindrel is going to delay its quarterly filings because it cannot verify that it's internal controls over financial reporting are sound and they need to kind of you know report on this for lack of a better term and explain what the heck is going on here.
So to uh I'm sure Vashuasco's of the market, that sounds like fraud or a chicanery or just incompetence.
But either way, it's terrible.
So this is not one of those deep value plays that I think you you spend a lot of time putting money behind.
Monday might be different, and I know you had a question about this one, Jason, because it it did report you know, it beat estimates in its its most recent report.
The outlook, though, came in a little short on the revenue side and on the margin side.
And so that sounds I I'm guessing that that codes to the market as uh-oh, this company is getting disrupted.
And I'm not sure that's true.
Yeah, Tim, you your company comes in and reports, you know, mid-20s revenue growth, and you see a 20% haircut, you're like, okay, what's going on here?
You look at the existing results, and and we saw operating income and margins fell.
And then the guidance, it really looks like in the second half of the year, they're guiding for substantially slowing growth and continued deterioration of the margins.
To me, I think that's really the story.
Sure, the revenue decline, decline slowing growth is that, but revenue growth is slowing and you're losing because revenue growth, you're supposed to be getting more operating leverage for a business like Monday.com.
That's not happening, right?
Well, it's not, but there's a couple of mitigating factors here.
And I would I will point you, those of you who are listening who are members of the Motley Fool.
First of all, we really appreciate you.
We love our entire audience, but we appreciate you, those who are tuning in as as members.
There is guidance on the site.
Please go to your services.
You will you will see um some guidance that we have issued, a little bit of analysis on these results from uh my co-captain of Supernova Odyssey, David Meyer, and also Alicia Alfieri on the rule breakers team.
She's also issued a bit of guidance here.
But sum it up, Jason, super quickly.
Uh there are some foreign exchange effects here.
That does have a drag on margins.
Also, we're really early in the deployment of AI agents for Monday.com.
It's only right now at a million in trailing 12 month annual recurring revenue.
Because they just were I mean, they were just launched in October.
But that's scaled really quickly.
Now, over time, do I think that's gonna be much higher margin revenue that as that scales up across the entire customer base?
Yeah, I do.
So there's a lot of expense that's coming along with that first group of customers.
Yeah, you're gonna you're gonna invest in that to build it, but the customers are taking them up on it and putting AI agents into their Monday.com environment.
That's a good sign.
So I don't see a lot to be really worried about here, but as I've said many times, it's always good to take a breath, pause.
You don't have to buy more right now, you don't have to sell right now.
It's a good time to let everybody else light their hair on fire.
You do not need to join them.
It's kind of painful to light your hair on fire anyway.
You pretty you really don't want to do that.
But let's talk about um talk about lighting hair on fire.
Boy, has there been a lot of spending, Travis.
Like huge amounts of spending, just a metric ton of cash on CapEx.
And that did seem to be the story of last week's earnings.
So I did a short analysis here.
I looked at Gemini.
I did not fully check the numbers, but they looked, I eyeballed it and it looked right.
About 400 billion over the last four reported quarters.
And this is amongst the top six companies in terms of net capital expenditure.
So this is Amazon, Alphabet, Microsoft Meta, Apple, and NVIDIA.
That's a huge amount of money.
So here's what I want to know from both of you, starting with you, Travis.
Is this worth it?
Like, is this really worth it?
Because this is one of the stories, right?
Do we do we expect as investors to get something out of all this?
It really depends.
And it depends who you look at.
I think, I think is the is the answer there.
Let's start with Alphabet, because I think they were the talk of the market in 2025.
And the question for Alphabet was are they going to be disrupted by open AI and by all these chatbots and stuff like that?
The one way to not be disrupted is to outspend all of these companies so that your infrastructure is better, so that your models are better.
And so I think Alphabet is just this is a scorched earth story.
They are ensuring that no one is going to disrupt them.
And the the momentum that they have with Gemini, with putting our AI tools into search, they are foreclosing, I think that opportunity for disruption.
It reminds me a little bit of Facebook.
Was it about 10 years ago when Snap had a ton of momentum and they just said, you know what?
We're gonna, we're gonna copy exactly what you're doing, and their growth just stalled out.
We're kind of starting to see, I think the canary in the coal mine with that with OpenAI.
Their growth is slowing and Alphabet's actually starting to pull away some of those users.
Actually, a really I thought a really effective ad at the Super Bowl last night.
But that's the story for them.
The other companies are a little bit different.
Meta is gonna have ROI on their own business.
Also, Mark Zuckerberg gets to do whatever he wants spending in AI because he controls the company.
So I I don't know if we're necessarily gonna get a payoff for them.
Amazon, I don't know, they're late to the party, but you gotta, you gotta kind of spend the money to play.
And then, you know, I Apple is not putting a huge amount towards this in the first place.
So when you look at those four companies, and add Microsoft in there too.
They need to be in this game, they need to grow Azure.
They are tied to open AI.
It's all very rational.
And by the way, they may say in 2027, we're gonna pull this back a little bit.
Instead of spending $600 billion, we're only gonna spend 400 billion dollars.
And that could also be another rational move because those competitive threats by then may not be what they were six months ago and what they are today.
Jason, are we are we gonna bigfoot this market?
Is that is this Travis Wright year?
Is that the strategy?
I think so.
But thinking about it from uh kind of the next level, uh next like second order impact.
What we're seeing, with the exception of Amazon, really, is these companies are substantially changing the way they have managed their balance sheets for years and decades before, taking on the substantial amount of capital.
A lot of it we're seeing is starting to be funded by debt, which is new for a lot of these companies to be using debt in this way in these large quantities.
Now they mostly have the money to do it, they have the cash flows to do it.
But Meta, for example, has gone from a company that had massive amounts of net cash to if they're not there now, they certainly will be within a few more quarters of having substantially more debt than cash.
And with this kind of capital investment, it's a hamster wheel, right?
Where you're constantly having to reinvest to refresh to stay ahead.
It is an all-out sprint for these businesses.
It is a land war right now.
There's no doubt about it.
Everybody is, this is this is everybody's trying to capture market share.
If AI is even remotely close to what we're starting to think that it could be, there.
This probably will be a multiple winner space because so much of what so many of these businesses do is providing the access to the compute where they don't necessarily have to have the best AI, but you have to have good enough AI to sell to people to monetize it for the ones that are doing AI that they're building themselves.
So, in a way, I think Apple's strategy for what they do is really compelling to me because they are going to be positioned to do what they've always done really well.
And that's have great hardware, great, a great ecosystem and interface that they build that they own, and then highly curate the things that have access to it.
So they could actually still be a winner in this, even though they're clearly way behind on building AI themselves and they've kind of walked away from it because they've been so bad at it.
What I don't know is when inevitably we do outrun the demand.
Because right now, let's remember that.
Every single CEO that we've heard from has been clear.
This is a demand issue.
There is still far more demand than they can meet because they can't even get enough electricians and permits in place to connect these uh these data centers to the grid, right?
So as long as that's the case, I think the inevitable outrunning of demand and overbuilding is probably farther into the future than maybe we realize.
Yeah.
Let's also keep in mind that the economics is it of this is probably going to be very different than tech, has been typically been in the past.
Absolutely.
I think the analogy is going to be something either the airline industry or the oil industry.
Where if you buy in an Nvidia GPU, you spend, you know, 100 billion dollars on CapEx.
If you're not running that at 100% utilization, then how do you get more demand?
Do you lower your prices?
Do you just run it under 100% utilization?
The economics start to get a little bit more hairy when your demand does not quite hit supply.
So that's why you get all these games with businesses like Airlines.
How do you maximize the return?
How do you keep the flight full?
Maximize the dollars that you're getting from each one of those flights.
That's not necessarily something they're going to be able to do quite as easily.
That's why I thought, you know, oil is the other thing where it's just a commodity.
If if tokens are just a commodity in the future, is that the business that they want to be in?
That's why I think the first thing we need to look at is what was the threat, and have they eliminated the threat?
And if you do that, then you can look at okay, are we spending this money wisely?
And 2026, uh maybe not.
So there's okay.
Let me make sure I heard you both correctly here.
We are in the scorched earth stage of the market, and we have not yet got to the stage where we're we're fixing the land, starting to water the water the plants and actually get out get a harvest out of this thing.
We're still just burning crops, baby.
This is what we're doing.
Yeah, I think that's right.
All right.
Well, we're gonna talk about in our next segment a couple of companies that are doing exactly that, and whether or not these are winners or are they losers?
You're gonna want to stay tuned.
You're listening to Motley Full Money.
All right, fools, let's talk about a couple of companies that are subject.
I and I pick these two, Jason and Travis, because I think they are especially sensitive to how much spending is going on in the uh in the AI sector.
And that is Core Weave ticker CRWV and Oracle ticker O R C L.
Now, full disclosure here, guys.
I have said publicly, and I am sticking to this, that I think that Core Weave is overstretched and might go bankrupt.
I've said this before, so I'm gonna start with them and I'm gonna kick it to you to start here, Jason.
I want to give you some some data here.
You feel free to tell me I am wrong about this, because they have absolutely crushed it.
You know, Corweave has beaten the market by over 136% over the past year.
That is absolutely outstanding.
So if you've had this stock for a while, you have been a winner.
But this is a company that has about $14 billion dollars in debt, pays over $300 million in in interest in recent quarters.
So they are they are levering up massively.
They do have high interest rate debt.
They have some that is double digit uh interest rate debt.
The thesis here is that they have more than $50 billion in backlog that they cannot yet realize.
They're building.
It's what Travis said.
It's scorched earth.
We're building, we're building, we're building, and someday we're gonna be able to harvest.
Do you believe it?
I I don't think believing it is really the right question to answer.
I I think what it comes down to is are the things that they're bringing to the table, and probably the biggest one is that what makes core weave a little bit different from the hyperscalers that are selling bandwidth?
Is it's faster, right?
It is faster.
So like OpenAI, for example, is going to be able to speed up their process.
They're going to be able to develop AI works faster.
It's gonna happen faster.
Technically, that should lead to them being able to advance the product faster, make it better, get to a point where their ROI is better more quickly.
The question is twofold.
Number one, how long is that 10 to 15% advantage uh in in speed?
I guess you could kind of say speed.
It's not exactly speed, but it's latency more than anything.
Like how how long is that going to be something that's worth more money?
Right.
And is the pause, the stop and take your breath from all of the other hyperscalers, is that going to happen before they do get to scale, right?
And here's the other biggest question.
Is OpenAI going to be able to make their commitments that's tied to the big capex and the debt that's that's there?
And lastly, to make it even more complicated, are partners like NVIDIA going to continue to have the purse strings connected to the core weaves of the world as providers of capital at need, right?
How long is that going to continue to be the case before a Jensen Wong says, okay, now we're at the point where it's good money after bad and we have to just walk away?
And I don't know the answer to all of those complexities, but this is what I do know.
I do know that it means that core weave is heavily reliant on a lot of things that they have absolutely no control over and minimal influence to survive any sort of a slowdown in this sprint.
If there is a slowdown, they get in trouble faster than anybody.
I'm gonna give you a stat, Travis.
I know you are I know you want to get in here because this is important, but I got to give you a stat.
So 2026 CapEx, right?
2026 CapEx is estimated to come in at about 220% of revenue.
That seems absolutely bonkers to me.
It is.
And what I what I think it is, is it's a confidence game.
And if if you remember, I know Jason and I were covering a company called Sun Edison about a decade ago.
And the idea with Sun Edison was they could build wind and solar projects basically to infinity by simply selling some debt here, selling some equity there.
And as long as your cost of capital, your combination of the cost of those two funding sources were lower than what your return was going to be on the asset that you were building, you were good to go.
And you could just do this over and over and over and over again.
The problem becomes when does the market say no?
When does the market say, you know what?
You already mentioned the debt.
They don't exactly Corbiv doesn't exactly have cheap debt.
No, they're not doing solar projects where the debt was 4%, 5% interest rates.
This is this is higher cost debt.
So the market, the debt market is already telling you things, right?
Travis?
They're already saying, hey, we don't we don't quite believe this.
Yeah.
If the equity market goes the same direction, then the whole thing topples over.
So that's really the risk that you have to look at with these companies.
It's a very, very different calculation.
If you're Sudanar Pajai and you're looking at Google's cash flow and balance sheet, and you're just saying, why don't we spend everything that we possibly can to make sure that we're not disrupted by open AI?
Because if we at the end of the day, if we need to pull that back, that's fine.
We still got more cash coming in the next year.
Correct is in the same position.
There is no next year if they don't get that funding, if they don't get the next project.
So it's all it's a very, very different risk profile.
And you start adding to debt.
Everybody who's studied bubbles in the past will tell you the two signs that it's surely a bubble is when people start using debt and when nobody thinks it's a bubble anymore.
And that is, yeah, that is that is terrifying.
I will say in Koriv's defense, what they say the CapEx that they are committing to is success-based.
So they will not commit the CapEx until they have a contract that would allow them to apply the CapEx they're buying.
But a contract.
So I I have some doubts about that.
Okay, quickly, because we're we're running short on time here.
Let's talk about Oracle.
Oracle has a $523 billion backlog.
They also have quite a bit of debt, uh, but they also generate quite a bit of free cash flow here.
So they just did, Jason, a $50 billion capital raise, half through debt, half through equity.
So they are just raising money hand over fist.
I it does seem to me that of all of the companies that are going scorched earth, this company is going scorching the most earth relative to what it can bring to bear in terms of resources.
So tell me, both of you quickly.
Do you think that this strategy for Oracle in particular, which has an interesting place, by the way, in the market, playing Switzerland in the data center market with these exadata, you know, exadata machines, it makes sense.
And yet, I mean, this is a heck of a bet, Jason.
I I think in a lot of ways it's a necessary bet, though.
I think okay, so you have to go.
So we're back to it again.
You must go scorched earth.
There is no choice.
Oracle's future it would look vastly different if if the company doesn't make an attempt to be a substantial part of the AI uh infrastructure where AI lives and having it connected to its own data because of its enterprise customers.
That this is, I mean, it's it's become table stakes for a business like like Oracle.
Um, there, I think the saving grace, though, is that if things don't turn out, if we don't have a panacea, Oracle still has a pretty good business that's there.
It's going to be heavily encumbered, right?
Uh I I don't think it goes away.
Like I don't think it goes to zero, and then somebody's buying the pieces off the scrap heat with like you could see with a core weave.
But I do think that they're taking a necessary risk.
And I guess if we were to ask the question between Oracle and Core Weave, which of those do I think that there's a better risk or war profile on?
I think it's Oracle because the floor is higher, right?
And the business is is more stable.
But I want to point out that at seven and a half times sales, before the past couple of years, this is the most expensive Oracle has ever been.
So as much as the stock has fallen, it's still not cheap.
Yeah.
Travis, where are you on this?
One correction for you.
They are operating cash flow positive.
As of three quarters of the growth they are not free cash flow positive.
And that's because of all the caps.
That's the real yeah, because of all the capex.
But I but I want to clarify that because they have a hundred billion dollars worth of debt, and they're only adding to that debt load.
So they're leveraging up the company betting on this.
And by the way, you mentioned the the RPO, the uh remaining performance obligations.
Right.
The background.
That was when the stock the stop stock jumped in the fall.
Who is providing all of that backlog?
Most of it is open AI.
Yeah.
Yeah.
And again, this is a it's a confidence game.
Does open AI get to be the thing that you think it could be in the future and and live up to all these high expectations?
Maybe.
But we talked about the one problem with that early on, Alphabet is spending $180 billion dollars making sure that doesn't happen.
That's what's got to worry you if you're Oracle.
Well, look, I mean, look at how quickly things change, though.
I mean, we were we were talking about Gemini and Alphabet, how much it had moved from a really troubled business to a big leader.
The past six weeks, the story's been clawed.
And by the way, I will tell you, I have access to full claw, and it's good.
It's very, very good.
We're gonna be talking different names this summer.
Yeah.
I thought that's my point.
I am sure that I'm sure that we will be.
Fools, we're gonna preview tomorrow's show.
Stay tuned.
You're listening to Motley Fool Money.
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All right, coming up tomorrow, more interesting stuff.
We got a lot more earnings coming.
Emily Flippin is gonna be doing a rule breaker's earnings roundup.
She's gonna be welcoming Toby Bordelon.
And guess who else is gonna be back?
Jason Hall will be back.
They will be talking data dog, Ferrari, and Spotify, all of which we'll be reporting on Tuesday morning.
So please make sure to tune in and leave a comment for us if you have thoughts about that show.
And leave a comment for us today.
Uh so you can tell us what you think about this show.
I know we went through quite a lot here, and we will take your questions and maybe uh maybe do some follow-ups on them.
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