Monologue: What The Hell Are The Hyperscalers Doing?
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What is the main topic discussed in this episode?
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What question opens Ed Zitron's monologue about hyperscalers?
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Superstition, fear, and jealousy. Welcome to this week's Better Offline Monologue. I'm your host, Ed Zittron.
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How much are Google’s announced capital expenditures and why does Ed call them insane?
The link will be in the episode notes. And we're giving you $10 off the annual rate for life. And even if you die and come back to life, I'll give it to you anyway. The deal runs through midnight on Sunday. But if you happen to hear this after this point, email me at ez at betteroffline.com or ez at betteroffline.com for the British and Canadians in the audience. And I'll sort you out. I'm generous like that. And I love my premium. It's really some of the best analyst work out there. It's very deep. I've got the terminal going now and pulling all sorts of data. The many numbers I read every week are driving me truly insane. And with that in mind, today's monologue starts with a simple question. What the fuck are hyperscalers doing?
Now, I realize I've asked this question maybe 100,000 times in the last two years, but it's begun to get so incredibly stupid that I'm actually a little exasperated. McKinsey Sporn and Google CEO Sundar Pichai announced in Wednesday's earnings that Google would raise its year-end capital expenditures to somewhere between $195 billion and $205 billion after burning $80.6 billion in the first half of the year. And this suggests that Google will spend another $114 billion by the end of 2026. They're going to be doing like $55, $60 billion a quarter. It's fucking insane. It's fucking stupid.
Why does Ed argue Anthropic is driving Google Cloud’s recent growth spikes?
I'm sorry for swearing, but it's absolutely deranged. What are you doing, Sundar? You've already spent $288 billion in capex since 2022, and all you've got to show for it is several also-ran LLMs and one indeterminately large customer in Anthropic, who you've also invested $13 billion in. Now, one answer might be that Anthropic helped juice Google Cloud's growth by 82% year over year in this quarter, but considering that Google doesn't actually break out how much of that is from AI, or from Anthropic, or really from anything, it's difficult to say what exactly this money is doing other than turning its free cash flow negative for the first time since Google went public.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–0:59
2
What question opens Ed Zitron's monologue about hyperscalers?
0:59–2:38
3
How much are Google’s announced capital expenditures and why does Ed call them insane?
2:38–3:52
4
Why does Ed argue Anthropic is driving Google Cloud’s recent growth spikes?
3:52–7:32
5
How have hyperscalers’ capex trends compared to cloud revenue growth over the last two years?
7:32–11:39
6
How much have hyperscalers spent overall and what accountability is missing for that $1.1T?
11:39–15:02
7
How much did OpenAI spend on Azure in 2025 and how did that impact Microsoft’s cloud growth?
15:02–15:06