Big Tech Earnings, AI & the Next Investment Opportunity

falling close to 9% last week while Tesla plunging 19% while both reporting negative cash flow.

Google for the first time as a public company and Tesla's first time doing so in over two years now.

Both companies expect AI cap spending to grow.

Alphabet hiking its 2026 by $15 billion to $195 billion at the low point.

Now while you must see the company indicated cap will climb to $25 billion.

This year and expects massive caps for next year.

Now for more mag 7 companies report this week revenues could be key in helping investors discern whether big tech spending is justified or sustainable.

Well joining me on this Monday morning is Jeff Gitterman, managing director at Gitterman Asset Management.

Jeff, good morning.

Thank you so much for joining us.

Thanks for having me.

Well, here we are.

We did get a Tesla as well as Alphabet last week, but we are awaiting Micro.

Softmeta, Apple, as well as Amazon this week.

So what do you make of expectations for monetization and AI CapE spending where they stand right now?

You know, it's interesting because we're looking at president and saying, you know, historically between the internet, railroads, anything you can look at was this CE spend justifiable.

And in any previous segment you'd have to say no, that this current capE spending dwarfs anything.

That we've done prior even in inflationary terms, and the idea that we can actually catch up with revenues and get to $680 billion in revenues, which is what Jamie Dimon said we need in order to get to 10% profit seems really tough based on current expenditures and current revenue models, but we're in a whole new world.

I mean this is AI, this is a race for our future.

Everyone is spending money.

Everyone is investing in.

Each other, there's this big circular economy going on where you're selling chips to the company that you also own and you're booking the chip revenue as profits and you're booking the company's profits as revenue to your company as well.

We think we can probably get there, but there's going to be some ups and downs.

Yes, absolutely, because we have been seeing those ups and downs in 2026 and when we're looking at the AI trade, there are For a lot of moving parts here.

So how are you looking at this space right now?

I mean, we're nervous about just buying into the end product users.

We're much more interested, and we talked about this before in the infrastructure that's required to get to the compute that we need.

I mean, we need to spend a lot of money on infrastructure, on electricity, on water resources, on data centers, and also.

Like things to be nervous about.

We're seeing a ton of pushback within communities against data centers.

Erin Brockovich is out now with a big push from, you know, her previous history of the lawsuits that she filed on data centers because of water issues and other problems that people are having.

So we see that push.

We see the competitive nature of Chinese AI companies which are building off of our models and then getting to. at a much cheaper scale because they're building off of our models and training off of our models and there's some pushback domestically within the political system about whether we're going to try to freeze that out like we've done in the past with manufacturers like Chinese auto manufacturers.

So we're in this interesting world where is it safe to own Oracle when Oracle is down 40% even with decent earnings?

Is it better to own The underlying infrastructure that we need to get to revenue targets.

Yes, and Jeff, finally, before I let you go, I do want to get your take on timeline when it comes to enterprise ROI here.

So for portfolio managers who are out there talking to their clients, how should they be looking at this?

I mean, I think right now we're looking at like literally the next 36, 12 months because you're seeing revenues go up so rapidly.

Within Anthropic they went up $100 million over the prior year a billion.

With OpenAI they're going up rapidly month to month.

So we're literally looking at quarterly.

Can those revenues catch up to the spend and that is the question of the day.

But I think as long as these hyper scales are investing in the AI companies as well and the circular chain is going on, I think as long as that.

Going we can see it catch up, but it's going to be a bumpy ride for sure.

Be diversified.

That's my message for sure.

And we have about 60 seconds here.

So when it comes to evaluation, how should the equation, the calculus, be looked at right now?

I mean, it's tough because SpaceX, I mean they had a great open.

They ran for the moon, and then they came right back down to Earth, no pun intended, so quickly.

So I think you have to be really careful. about betting the farm.

It's back to like 1999.

Don't put all of your money in red hat.

Spread your money out among the companies that are building the infrastructure, delivering the compute.

Now we've got future contracts on compute power.

It's an interesting market.

There's lots of ways to play it, be diversified.

Well, Jeff, we will have to leave it there for today, but as always great to have you on the show.

Thank you so much for joining us today.

Thank you.