Shares of Google parent Alphabet (GOOGL) slid Wednesday, a day after the company spooked investors with a downbeat outlook regarding its cloud computing business. Upon deeper examination, there was actually some encouraging news regarding artificial intelligence (AI).
That could be to the benefit of exchange traded funds such as the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM), which are heavy on AI stocks, including Alphabet. Entering this year, one of the big issues monitored by analysts and investors was the extent to which AI adopters, such as Alphabet, would spend on AI – highly pertinent to the myriad AI enablers also held by QQQ and QQQM. Alphabet may have allayed those concerns.
“Similarly to fellow tech peers, Alphabet is spending significantly on generative artificial-intelligence initiatives. The company reported capital expenditures in the quarter of $14.28 billion, above Wall Street’s estimate of $13.26 billion and an increase from $11 billion last year,” reported Barron’s.
AI Spending Surge Could Lift QQQ
For those concerned about 2025 AI spending and its potential effects on ETFs like QQQ and QQQM, consider the following. Alphabet, Facebook parent Meta (META) and Microsoft (MSFT) are expected to post combined 2025 AI expenditures of $228 billion.
Just three companies’ AI spending in a single year isn’t far below the market capitalization of Cisco Systems (CSCO). That spending and expenditures by other QQQ/QQQM holdings could be justified as Chinese companies, such as DeepSeek, make AI inroads.
“The Chinese startup rattled markets last week as it debuted open-source AI models competitive with OpenAI’s for a fraction of the price. Tech stocks sold off across the board as the model cast doubt on the rationale behind tech giants’ mammoth spending on artificial intelligence infrastructure,” reported Laura Bratton for Yahoo Finance.
Meta forecast 2025 spending of $60 billion to $65 billion with much of it directed to AI. This makes sense: the number of users of its AI advertising tools quadrupled in just a few months. Amazon (AMZN) is expected to be another major AI spender this year.
Some analysts on Wall Street see the elevated spending as a catalyst for AI and cloud computing equities. Many of this equities call QQQ and QQQM home.
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