Latest / Connecting the Dots / Alphabet’s AI Boom and a Fragile U.S.–China Truce

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Alphabet’s AI Boom and a Fragile U.S.–China Truce · Connecting the Dots

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  Today's tech news moves fast, but understanding
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  it shouldn't be hard. That's why Snarful Solutions
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  Group brings you Connecting the Docs, where we
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  break down what's happening in tech and why it
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  matters to you. Now, let's dive in with your
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  hosts. Welcome back to Connecting the Docs. I'm
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  Alex. And I'm Morgan, here from Snarful Solutions
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  Group. Happy Thursday, everyone. It is October
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  30th, 2025. And a nice day out there in Sacramento,
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  mostly sunny, high around 77 degrees. Yeah, pretty
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  pleasant here, though. Nationally, it looks like
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  a lot of rain, thunderstorms from the Ohio Valley
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  up to the Northeast. Right, and even some coastal
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  flooding forecast along the East Coast, so stay
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  safe out there. Definitely. Okay, quick market
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  check. Let's do it. Market's looking pretty optimistic
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  yesterday. The Dow jumped what, over 400 points?
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  Yeah, 401 .280 points, up about .85%. The S &P
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  500 saw a nice little bump too, up 12 .60 points,
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  that's .18%. Okay, positive moves. But Bitcoin?
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  Still the wild ride. Oh, yeah still volatile
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  it dips slightly about one point eight seven
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  percent But look at the range bouncing between
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  like a hundred seven thousand four hundred fifty
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  eight dollars and a hundred eleven thousand five
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  hundred forty one dollars Huge swings that volatility,
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  you know, it really speaks to this underlying
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  theme today the intense demand the The pressure
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  in the tech infrastructure world. Absolutely.
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  Okay. Let's connect some dots. Time for the Morning
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  Star. And we have to start with Google. I mean,
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  Alphabet. What a quarter. A monster quarter,
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  indeed. Story one. Alphabet hit its first ever
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  $100 billion quarter. Actually, $102 .35 billion
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  in revenue blew past analyst expectations on
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  revenue and earnings per share. Wow. $102 billion.
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  And shares popped after hours, right? About 5%.
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  Yep. But here's the kicker. Analysts weren't
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  just cheering the revenue number itself. They
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  were, maybe surprisingly, cheering the company's
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  plan to, well, spend a huge chunk of it immediately.
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  Exactly. That's the real story here. It's not
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  the $102 billion coming in. It's what they're
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  pouring right back out into infrastructure. So
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  where's that money going? Primarily AI, I assume.
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  Entirely driven by AI demand, yeah. Google Cloud
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  revenue hit $15 .15 billion, beating estimates.
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  But this comes at a cost. A really big cost.
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  Okay, hit us with a big number. Capital expenditure,
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  right? CapEx. That's the one. Alphabet raised
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  its CapEx forecast for 2025. Again. Again. I
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  remember we talked about the $85 billion projection
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  just, what, a couple of quarters back? And that
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  seemed huge then. It did. Now they're projecting
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  $91 billion to $93 billion for 2025. $91 to $93
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  billion. What does that signal? Is this, you
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  know, visionary future building or is it just
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  getting caught up in a massive AI arms race,
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  maybe spending too much? Well, that's the debate,
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  isn't it? But from their perspective, this isn't
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  really optional spending. It's driven by demand.
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  The CFO explicitly said 2026 capex is expected
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  to see another, quote, significant increase.
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  Wow. Beyond even the 93 billion dollars. Seems
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  so. Mostly for data centers, the technical backbone
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  to handle all these AI workloads. And, you know,
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  to put that demand in perspective for you listening.
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  Get this. They have a $155 billion backlog for
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  Google Cloud. Wait, a backlog of $155 billion?
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  That's committed future business. Committed demand
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  for things like their Gemini 2 .5 model, enterprise
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  AI infrastructure, chips, the works. OK, so you're
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  right. This isn't just chasing growth. It's more
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  like a desperate sprint to just keep up with
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  the demand that's already there. Exactly. And
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  they mentioned the Gemini app alone has, what,
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  650 million monthly active users. The demand
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  is real and it's immediate. It's an infrastructure
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  race, plain and simple, measured in tens of billions.
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  Right. And that race for infrastructure, all
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  those chips, servers, data centers, well, it
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  doesn't happen in a vacuum. It needs physical
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  stuff supplied globally. Which leads us straight
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  into the geopolitical side of things. The supply
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  chain meets politics. Perfect transition. Let's
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  pivot to Asia. specifically the U .S.-China relationship,
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  story number two, that meeting in Busan, South
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  Korea, President Trump and President Xi Jinping
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  agreed to a truce. A one -year truce, right,
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  to kind of cool down the trade war. Exactly,
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  a temporary truce. It was pretty critical timing
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  -wise because a previous pause was said to expire
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  very soon, November 10th. But you emphasized
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  temporary, so this isn't like a peace treaty.
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  Definitely not. No joint communique was issued,
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  which is usually a sign. But there were some
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  important concessions on both sides regarding
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  tariffs and commodities. OK, let's break that
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  down. What did China concede to get this pause?
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  Well, the big one was they agreed to postpone
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  those export controls on rare earth minerals
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  they just announced back on October 9th. The
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  rare earths. We'll come back to those. That's
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  huge for manufacturers. Huge. Those controls
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  really had the potential to snarl supply chains
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  globally. So postponing them is Welcome news.
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  Okay. And on the US side, we had those hefty
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  tariffs in place. What did the US give? The US
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  agreed to cut the 20 % tariff specifically linked
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  to fentanyl trafficking issues in half. So that
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  particular tariff drops to 10%. Which brings
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  the overall average tariff rate down a bit. Yeah,
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  it lowers the overall average tariffs on Chinese
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  goods to about 47%. This is a noticeable reduction.
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  And I bet U .S. farmers are breathing a sigh
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  of relief, too. They should be. China also committed
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  to buying, quote, tremendous amounts of soybeans
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  and related agricultural products. Tremendous
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  amounts. OK. How did the leaders frame this?
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  I heard President Trump was pretty positive.
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  He was. He described the meeting as a 12 out
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  of 10. Pretty high praise. A 12 out of 10. Wow.
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  And the Chinese side? much more reserved. Their
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  official statements were quite sparse, really
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  just focusing on the need to avoid a quote, vicious
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  cycle of retaliation. Hmm. Vicious cycle of retaliation.
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  That sounds transactional. Like they see this
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  as just buying some time, not a fundamental shift.
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  That's certainly one reading of it. And it sets
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  up our third story perfectly because this temporary
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  relief runs right into a more permanent risk.
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  Right. Back to those rare earth minerals. This
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  is where Google's massive spending connects directly
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  to, well, global stability. Exactly. These materials,
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  things like dysprosium, neodymium, you know,
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  the ones with complicated names. The ones essential
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  for basically everything high tech. Pretty much.
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  The magnets in electric cars, the chips in those
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  $93 billion data centers, Google's building sophisticated
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  military gear. It all relies on these minerals.
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  Okay, so the truce suspended the expert controls
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  China announced last month in October. But you
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  mentioned there's still a problem. Why is the
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  supply chain still feeling shaky? Because of
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  what wasn't mentioned in the agreement. There's
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  a massive loophole basically remember those stricter
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  licensing requirements trying to put in place
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  way back on April 4th I do remember that so those
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  are still active exactly the October 9th controls
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  are paused Yes, but the agreement said nothing
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  about lifting those earlier tougher April licensing
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  rules and those rules are still choking the supply
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  flow So the relief is only partial the bottleneck
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  implemented back in April still there causing
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  problems right now immediate problems And severe
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  ones. We're hearing from European American companies.
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  They have been running down their inventories
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  of these materials since April. It's getting
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  critical. What kind of real -world impact are
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  we talking about? Think about manufacturers making
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  critical parts for cars like steering motors,
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  high -tech braking systems. Some are barely getting
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  enough shipments to keep production lines running.
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  There have even been reports of brief shutdowns.
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  Companies scrambling to find alternative sources.
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  Which inevitably means price instability for
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  future products. Things are going to cost more.
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  Absolutely. Do you want an example of how extreme
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  it's gotten? Yeah, give us one. Okay, take dysprosium.
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  It's used in special heat -resistant magnets,
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  vital for EVs and other systems. Since April,
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  the price outside China has shot up at least
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  six -fold. Six -fold. What's the price now? It
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  hit $1 ,200 per kilogram. $1 ,200 a kilogram.
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  Wow. Okay, so that cost, that gets baked into
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  the price of electric car. maybe even your next
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  smartphone, pass right along to you, the consumer.
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  Precisely. So this truce, while helpful in avoiding
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  an immediate cliff edge disaster, it didn't solve
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  the underlying vulnerability in the supply chain.
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  Not by a long shot. Okay. And that vulnerability
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  exists because other big issues weren't even
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  touched on in Busan. Right. Key unresolved questions
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  remain. What happens with TikTok? What about
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  those really advanced semiconductor chips? The
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  kind Google needs billions of dollars worth of?
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  The Blackwell chips and beyond? Still murky.
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  And the elephant in the room? Taiwan. Not discussed.
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  So yeah, this was a temporary ceasefire. It basically
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  kicked the biggest, most strategic conflicts
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  further down the road. a temporary pause on an
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  escalating high -stakes resource conflict. That
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  feels like a good summary for today. I think
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  so too. All right. Before we wrap this up, let's
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  -I dot R -com -com. Okay, so let's quickly synthesize
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  the main points for you today. First up, Google's
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  record -breaking quarter isn't just about the
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  money made. It's about the staggering amount,
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  $91 to $93 billion. They're immediately reinvesting
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  into AI infrastructure because customer demand
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  is just overwhelming. Right. Second, the U .S.
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  and China struck a temporary trade truce. This
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  lowered some key tariffs, secured big agricultural
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  buys for the U .S., and generally gave the markets
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  a bit of breathing room, which was needed. And
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  finally, number three, that truce only offered
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  partial relief on rare earth minerals. Crucial
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  restrictions from back in April remain, keeping
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  supply chains fragile and causing prices for
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  essential materials like dysprosium to skyrocket
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  up six -fold. So the big picture here is that
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  The absolutely explosive global demand for AI
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  is pushing spending on physical infrastructure
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  to almost unbelievable levels. And that spending
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  is colliding head -on with geopolitical risk
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  and fragile supply chains. It really is. What
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  does that escalating tension over physical resources
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  mean for the cost and maybe even the accessibility
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  of the technology will all rely on tomorrow?
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  Something to think about. And remember, we're
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  here to help at Snarful. So reach out on our
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  website if you have any more questions. Until
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  tomorrow, thanks for connecting the dots with
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  us. Take care, everyone. That's a wrap on today's
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  top stories. Remember, tech doesn't have to be
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  complicated, and we're here to help connect the
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  dots. If you've got questions or want to learn
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  more, visit us at snarful .com. Thanks for listening,
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  and we'll catch you next time.