Alphabet says capital spending will rise significantly next year as demand for AI compute stays strong, while analysts also warned wider French riots could trigger bond stress and bank deposit flight.
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01Summary
- 01Alphabet is spending roughly $200 billion this year on AI capacity, and Ruth Porat said capex will rise significantly next year.
- 02Porat said Alphabet remains capacity constrained as demand grows across enterprise customers, governments and its platform.
- 03Macquarie analysts Thierry Wizman and Gareth Berry warned that wider riots and higher French sovereign bond yields could cause deposit flight from French banks.
- 04The analysts said there is currently no sign of deposit flight, but they cited the recent rapid rise in US bond yields and the collapse of Silicon Valley Bank and Republic Bank as a comparison.
02Why it matters
The main market concern is that big AI spending may keep boosting Alphabet, while unrest in France could, in a worst case, pressure banks and the wider financial system. Investors will also watch whether bond yields and deposit flows in France stabilise.
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