Google and Microsoft's AI stress test

(Oliver Berg/Getty Images)

Hey Snackers,

One of the hardest parts of life behind bars is going years without your favorite comfort meal.

I mean, who would want to go a day without eating Vegemite, the sticky, dark brown tar-like substance made out of leftover brewer’s yeast? Australians, who often enjoy it smeared in a thin layer over white bread, love it so much one man convicted of murder argued it ought to be a human right for him to enjoy some in prison.

Unfortunately, the country’s Supreme Court disagreed, upholding one state’s ban of the product in prisons. One of the reasons it’s banned, prison officials argue, is because it could impair sniffer dogs trained to find drugs and alcohol.

Stocks closed up on Tuesday.

Google and Microsoft put the AI spending boom to the test

Alphabet, the parent company of search giant Google, and Microsoft will report earnings today as investors are increasingly seeking data over vibes to reassure them about the continued health of the AI boom. Both companies are expected to report enormous increases in AI-related spending, raising a familiar question: When will all this investment pay off?

And here is what the Street is expecting from Microsoft.

• $46.5 billion in capital expenditures, up 140% from $19.3 billion during the same period last year.
• $90.6 billion in revenue, up 16.7% from $77.6 billion during the same period last year.
• $4.71 earnings per share, up 14% from $4.13 last year.

And here is what the Street is expecting for Alphabet:

• $55.2 billion in capital expenditures, up 130% from $23.9 billion during the same period last year.
• $127.9 billion in revenue, up 25% from $102.3 billion during the same period last year.
• $3.03 earnings per share, up 5.6% from $2.87 last year.

Meta reported results last week and was punished after reporting negative free cash flow and outlining plans to continue spending aggressively on AI. Increasingly, the worry for companies betting big on AI is that they are taking on debt to fund a product that has not quite proven to be lucrative.

But not all AI spending is created equal. Meta, importantly, doesn’t have a cloud business (yet). Its AI investments are largely aimed at improving its existing products, particularly its massive advertising business, while developing new AI-powered services.

Google and Microsoft, on the other hand, may be spending a ton on AI but they’re also collecting checks from other companies who are also spending a ton on AI. That’s because they, along with Amazonhave compute to sell other AI giants. And those deals represent commitments from big AI players to spend figures that can run into the hundreds of billions going forward.

THE TAKEAWAY

A huge amount of power in the AI industry is in cloud giants like Alphabet and Microsoft. These same cloud companies are also investors in, customers of, and suppliers to major AI model developers.

Google and Microsoft can justify their enormous spending plans perhaps more than others: They don't necessarily need to build the next killer AI app to make money. They can sell the computing power to whoever does. That’s why, beyond their spending plans, investors will be watching cloud revenue growth and the size of their contracted revenue backlogs for signs that AI demand is keeping pace with investment

— J. Edward Moreno

“Maxxing” is Dictionary.com’s word of the year

Unlike with previous picks such as “change,” “xenophobia,” “misinformation,” or “pandemic,” the lexicographers and judges over at Dictionary.com mostly seem to have been looking to their social media feeds again for this year’s choice, after announcing “maxxing” as the 2026 Word of the Year earlier this week.

The term, short for “maximizing,” has been popularized among certain internet communities and various online figures, with all manner of prefixes attached to alter exactly what is being optimized to its maximum level — from physical appearance to AI token usage.

It’s not the first time that the site’s pick has veered into the very online sphere, with “67” and “demure” (remember that?) taking the top spots in 2025 and 2024, respectively. One begins to wonder whether all of this starts to look more like a cynical attempt to drive traffic, or engagementmaxx, from Dictionary.com, rather than truly “describe what the year was about,” per its own definition…

— Thomas Jones

What else we're Snackin'

• Rising memory costs forced "difficult trade-offs" on Amazon's device prices, sales, and profit, per Business Insider.
• A judge in New Jersey denied Novo’s request for a preliminary injunction in its lawsuit against Eli Lilly, in which the Danish drugmaker accuses its American arch-rival of falsely claiming its weight loss drugs are more effective.
• The Dallas Cowboys cheerleaders have unionized and began collective bargaining, per ESPN.
• Ben & Jerry’s keeps wanting to march to the beat of its own drum, the Wall Street Journal reports.

Snack Fact of the Day

During World War II the Australian Armed Forces bought Vegemite in bulk, in part because it's so nutritionally dense.

Wednesday

• Earnings from GE Vernova, Vertiv, Jersey Mike’s, Etsy, and Wingstop scheduled for release in the premarket.
• Federal Reserve decision at 2 p.m. ET.
• Google, Microsoft, ServiceNow, Ford, Fortinet, KLA Corp, Chipotle, T-Mobile, Carvana, and eBay earnings due out postmarket.

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