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YouTube at $60B and a Philosophical Rift in AI · 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 Snarfle Solutions
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  Group brings you Connecting the Dots, 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. Good morning, everyone, and welcome to
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  Connecting the Dots. I'm Alex. And I'm Morgan.
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  We are coming to you live from the Snarfle Solutions
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  Group Studios right here in Sacramento. It is
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  Thursday, February 5th, 2026. So if you're just
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  getting your day started, go ahead and grab that
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  coffee. It is a very busy morning. Lots to get
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  to. It certainly is. And if you're looking out
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  the window here in SAC, well, you're seeing that
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  classic morning fog. So please drive safe on
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  your commute. The good news is it's supposed
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  to burn off by noon. Yeah, we're looking at a
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  beautiful sunny high of 69 degrees later today.
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  Which is really a stark contrast to what's happening
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  on the East Coast. If you're listening in the
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  Northeast or the Mid -Atlantic, please take those
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  weather alerts seriously. A pretty severe Arctic
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  outbreak is moving in. Yeah, we're seeing predictions
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  of dangerous wind chills, potential for tree
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  damage, power outages. It looks like a really,
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  really serious freeze. And snow squalls. Yeah.
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  So if you're in that part of the country, Today
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  is a data prep. Definitely. All right, shifting
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  over to the markets for a quick look. It's a
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  little bit of a mixed bag this morning. It dows
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  down a little. Yeah, down slightly, about 85
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  points. The S &P 500 is basically flat, just
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  treading water. But the real noise is coming
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  from crypto. Oh, yeah. Bitcoin took a pretty
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  significant hit overnight. It's down nearly 3
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  .8%, so it's hovering around $70 ,200. That's
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  a sharp drop. It is. Might be one of those days
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  where you just, you know, close the app and get
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  going to need to stay sharp today. I'm looking
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  at our Morningstar report and wow, these are
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  some heavy hitting stories. Yeah, we're talking
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  about a huge shift in entertainment, a public
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  brand war between AI giants and a spending plan
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  that is literally reshaping the Internet. The
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  scale of the numbers we're looking at today is,
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  it's just staggering. So where do we start? Let's
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  start with story number one. Alphabet released
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  their earnings, and while Google search always
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  gets the headlines, the real story here is YouTube.
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  I mean, the numbers coming out of YouTube are
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  just rewriting the entire media industry. So
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  for the full year of 2025, YouTube's revenue,
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  ads and subscriptions combined topped 60 billion
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  dollars. 60. It's an abstract number, so let's
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  put it in perspective. Think about Netflix. We
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  all consider them the winner of the streaming
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  wars, right? For sure, the default. Their revenue
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  was around 45 billion. So YouTube isn't just
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  bigger, it's significantly larger than Netflix.
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  It's larger than Netflix, larger than Paramount,
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  you name it. The only entertainment company on
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  the planet making more money than YouTube is
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  Disney. But here's the crucial difference, and
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  I really want to unpack this. Netflix has to
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  spend billions of dollars to make shows. They
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  have to hire actors, build sets. That's the genius
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  of the YouTube model. Their cost for content
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  is so much lower. It's a revenue share model.
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  They don't pay for a video until that video is
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  already making money. Right. So while Netflix
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  is burning cash, hoping the next big show hits,
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  YouTube is just providing the infrastructure
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  for millions of other people to do it for them.
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  The profit margin on that is just massive. And
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  the earnings report really highlighted a key
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  behavioral shift that explains all this growth.
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  It's all about the living room. Yes, this was
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  the stat that jumped out to me. The CEO, Sundar
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  Pichai, said podcast viewing on TVs is up 70
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  percent. Viewing, not listening, viewing. That's
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  the key. It means the very definition of TV has
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  changed. We used to think of YouTube as something
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  you watch on your phone. Right, on the bus or
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  at your desk. Now, people are coming home, sitting
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  on the couch, and throwing YouTube up on their
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  65 -inch screen for hours. It's replaced the
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  sitcom. It's the new prime time. And you can
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  see it in their other numbers, too, like the
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  NFL Sunday ticket. Which hit a record high for
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  paid subscribers. They've absolutely conquered
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  the living room. And it's not just sports. They
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  locked up the exclusive rights to broadcast the
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  Oscars starting in twenty twenty nine. Just think
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  about that for a second. The Oscars. Yeah. The
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  absolute pinnacle of old school legacy Hollywood
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  media. Yeah. Red carpets, tuxedos, the whole
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  thing. And it's leaving broadcast TV. It's moving
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  to YouTube. It really feels like the torch has
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  officially been passed. The line between Internet
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  video and television is just gone. It's completely
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  gone. And their subscription numbers prove it.
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  Google now has over 325 million paid subscriptions
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  across all their services. They're converting
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  free users to paid ones at a scale nobody else
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  can touch. Now, it wasn't a perfect report. They
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  did mention the AI slop problem. Yeah, the CEO,
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  Neil Mohan, he addressed that. The platform is
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  getting flooded with a lot of low quality AI
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  generated spammy content. It's super annoying
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  to scroll through. But even with that, YouTube
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  shorts is averaging 200 billion daily views.
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  200 billion. It suggests that while we might
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  complain about the quality, the algorithm is
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  still keeping us completely hooked. The machine
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  is just too powerful. So YouTube has won the
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  war for our screens, which leads us right into
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  our second story. If YouTube owns the distribution.
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  Who's going to own the intelligence behind it
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  all? And we are seeing a very public feud breaking
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  out between the two leaders in AI, OpenAI and
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  Anthropic. This is like the tech version of Coke
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  versus Pepsi, isn't it? It is. We've moved past
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  the discovery phase and straight into brand warfare.
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  And it's all centered around the Super Bowl.
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  So set the scene for us. OK, so Anthropic, they
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  make the AI model, Claude, they release some
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  teaser ads for the Super Bowl, and they are aggressive.
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  The whole point is to make fun of chat GPT. How
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  are they doing that? They have a human actor
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  playing a chatbot, right? And the chatbot is
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  just obnoxious. It keeps interrupting the user
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  to sell them stuff. The user asks for a workout
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  plan, and the bot jumps in to sell shoe insoles.
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  So it's a direct shot at the idea that OpenAI
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  is going to start putting ads in chat GPT. Exactly.
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  The message is, we're the helpful tool for professionals.
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  They're the ones who are going to spam you. And
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  OpenAI CEO Sam Altman, he did not take that lying
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  down. Oh, not at all. He went straight to X.
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  And his response was really calculated. He started
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  off by saying the ads were funny, which is that
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  classic move to show you're not bothered. Right,
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  the I'm not rattled play. But then he pivoted.
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  And this is the fascinating part. He started
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  talking about Texans. Texans? Why Texans? That
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  seems so specific. It's a signal. He's basically
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  painting a picture of class warfare in tech.
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  He said, and I'm quoting here, more Texans use
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  chat GPT for free than total people use Claude
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  in the US. Huh. So he's framing Impropic as this
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  noosh, expensive tool for the Silicon Valley
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  elites. Exactly. The people paying $100 a month
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  for enterprise software. And by invoking Texans,
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  Altman is positioning open AI as the tool for
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  everybody else. The regular person's AI. The
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  blue -collar AI. It's a public utility, not some
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  luxury item. It's brilliant marketing, right?
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  He's trying to own the populist lane in artificial
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  intelligence. And this all connects to their
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  actual Super Bowl strategy, doesn't it? They're
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  not just running a counter ad. No, they're taking
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  the high road. Their whole focus is on builders.
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  They're pushing their new tool, Codex, which
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  helps people write code. He pointed out it got
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  500 ,000 downloads in just a few days. So the
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  message is, while they're making jokes, we're
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  making tools. Precisely. He signed off his post
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  with, I believe Codex is going to win. It's a
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  battle for who becomes the default tool in our
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  lives. Fascinating. So while they're fighting
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  for brand identity, our third story is about,
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  well, it's about the hard power behind all this,
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  what Alphabet is doing with infrastructure. And
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  the price tag is just staggering. This is the
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  part of the report that made Wall Street kind
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  of gas. We need to talk about CapEx, capital
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  expenditure. So this is the money for the physical
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  stuff. The data centers, the servers, the fiber
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  optic cables. Right. Alphabet's revenue is huge,
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  113 billion for the quarter. But they also announced
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  that in 2026, they expect to spend between 175
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  and 185 billion dollars on that infrastructure.
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  Hold on, say that again. 185 billion dollars.
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  Billion. With a B. In a single year. In one year.
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  That is roughly double what they spent in 2025.
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  And 2025 was already a record year for spending.
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  Why? I mean, why the massive jump? Because an
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  AI query is fundamentally different from a regular
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  search query. It takes exponentially more computing
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  power. They are literally having to rebuild the
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  architectural foundation of the internet to handle
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  it. So this money isn't just for servers, it's
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  for building the power plants to run them. It
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  really is. They're building data centers the
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  size of small cities. They're securing massive
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  energy contracts, building cooling systems. It's
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  a construction project on a global scale. What
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  does that mean for everyone else for the startups?
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  Can anyone even compete with a hundred and eighty
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  five billion dollars spend in a word? No, this
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  creates a giant motor on them. If you're a new
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  startup, you can't build this yourself. You have
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  to rent it. So you become a tenant of Google
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  or Microsoft or Amazon. The big tech companies
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  become the landlords of the digital future. That's
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  the reality. They're the only ones who can afford
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  this build out. And the craziest part is even
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  after spending all that, they're still Wildly
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  profitable. Oh, yeah, they posted thirty four
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  and a half billion dollars in net income just
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  for the quarter It's mind -boggling they can
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  spend a hundred eighty five billion on construction
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  and still make that much money It gives them
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  the freedom to experiment their other bets division
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  You know the self -driving cars and moonshots
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  it lost three point six billion a loss that would
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  bankrupt almost any other company on earth for
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  them It's a rounding error the core engine search
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  cloud and YouTube just prints money. It really
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  paints the picture. YouTube makes the cash, open
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  AI, and anthropic fight over the users, and Alphabet
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  is pouring the concrete for the world it all
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  runs on. It's a completely self -sustaining ecosystem.
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  So. As we look back on the morning, we've got
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  YouTube taking over the living room, a battle
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  for the soul of AI and this massive physical
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  terraforming of the planet to support it all.
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  What's the one big takeaway for you? For me,
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  it's convergence. 2026 feels like the year that
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  digital just stops being its own separate thing.
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  What do you mean? I mean, when YouTube is your
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  TV and AI is your assistant and data centers
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  are a major part of the national power grid.
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  The line between online and offline just kind
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  of disappears. That's a powerful way to put it.
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  The infrastructure of the internet is becoming
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  the infrastructure of our actual lives. It is.
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  And the companies we talked about today are the
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  ones pouring the foundation. Well, on that note,
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  we're going to let you get back to your Thursday.
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  We hope it's a productive one. Thanks for starting
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  your morning with us. We're here to help it snarfle,
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  so reach out on our website if you have any more
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  questions. That's a wrap on today's top stories.
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  Remember, tech doesn't have to be complicated,
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  and we're here to help connect the dots. If you've
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  got questions or want to learn more, visit us
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  at snarful .com. Thanks for listening, and we'll
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  catch you next time.