BizNews Ricardo Portfolio: Alec Hogg on Big Tech's AI spending race and the JSE's cash handback

This is for money. And that's the real reason for the sell-off. It wasn't because of the very small miss, it's the realization that the AI arms race has turned Google from a business that hands you cash into one that needs yours. And management made it clear that this isn't a once-off. Next year's spending will be significantly, that's the word, higher again. And now here's the case for the defense, and it's a strong one.

And that's why we aren't selling. Look at what the money is buying. Google Cloud more than doubled its sales this year. Doubled. That's an extraordinary number for a business of that size. Its order book of signed contracts is bigger than the entire company's revenue for the year. In fact, something like 50% bigger than South Africa's GDP. That's what it's got in its order book.

Customers are queuing for capacity that Google hasn't even built yet. And search, the business that everyone said ChatGPT would kill, people are searching more now than at any time in the last five years. The Gemini app has passed a billion users. So the spending by Google isn't vanity. It's chasing real demand.