"A" is for Alphabet and AMD Sliding, China vs. Apple, Uber CEO Exclusive 02/05/25

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Carl Quintanilla (0:32)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street. Good Wednesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer and David Faber at Post 9 of the New York Stock Exchange. Future is a bit soft amid some lumpy corporate earnings guidance and continued worries about trade relations with China. Ten-year yield now the lowest since mid-December as bonds focus a bit on the growth implications. Our roadmap begins with the AI arms race though as spending continues to ramp. Alphabet and AMD delivering the latest read on the AI boom.

David Faber (1:12)

Plus Apple shares are under pressure this morning. China is reportedly considering a probe into the company's App Store practices. And Uber sees its quote strongest quarter ever. Bookings outlook though perhaps seeing as being a bit disappointing, at least if you look at the pre-market for the stock, we're going to discuss all that and a lot more of the Uber CEO in just a few minutes.

Carl Quintanilla (1:34)

Let's begin with Alphabet today under pressure this morning after posting a quarterly revenue miss heard in part by a slowdown in cloud. Company also announcing plans to invest 75 billion in CapEx this year. That's a big revision above street forecasts. This is what the CFO had to say about that spending strategy on the earnings call last night.

SPEAKER_4 (1:52)

As we expand our AI efforts, we expect to increase our investments in capital expenditure for technical infrastructure, primarily for servers followed by data centers and networking. We expect to invest approximately 75 billion dollars in CapEx in 2025, with approximately 16 billion dollars to 18 billion dollars of that in the first quarter. The expected total investment level may fluctuate from quarter to quarter, primarily due to timing of deliveries and construction schedules.

Carl Quintanilla (2:23)

Jim, that's about a 30% revision higher. Meta's was only 20% revision higher.

Jim Cramer (2:27)

You're listening to the call and you're thinking, okay, it's pretty good. A lot of good stuff here. YouTube is really strong. There's a lot of profit, a lot of money being made. YouTube, you get very excited and then they just drop a total bombshell about how much they need to buy. And David, when I'm listening to it, I'm saying to myself, well, what happened to DeepSeek? I thought we all were supposed to be cut. Did we all just get had on the DeepSeek story?

David Faber (2:52)

Well, Jevin didn't get had. He knew. He knew. The 1865 economist back in Great Britain. We were talking about a lot last week, Jevin's Paradox.

Yes, he did. I don't think any of us expected, and I think we said this last week, when we got the commentary from many of these companies, that they would suddenly reverse their capex in some way. But I think what perhaps is a bit more surprising is the increases. You mentioned Metas, which occurred on Friday, I believe it was, 60 to 65 billion. Microsoft, at least 80, probably 85 billion. Some say it will go as high as 90 billion this year. Then you just referred to that significant increase in capex from Alphabet to 75 billion. The numbers are stunning obviously, and they all point to potentially an overreaction, I guess some would argue in what happened to Nvidia's stock price. I would add to that, Jim, that Alphabet shares are going to be down in part because of the deceleration of the growth rate of Cloud. Thirty percent, yes, still a very strong number, but not as strong as it had been. But what do you make of the comments on the call when the CFO said the Cloud misses due to being supply constrained? More demand than available capacity. Doesn't that say good things for Nvidia?

Jim Cramer (4:06)

Yes, it does. It says great things. Now what people are still concerned about is if you notice in the verbiage that they're going to be the first to sell Blackwell. Well, wait a second. I thought Blackwell was selling like mad. So that was a pause. Second, we have one more in this gauntlet. Will Amazon say that they're going to pause? Why didn't Alphabet say, you know what, in light of DeepSeek, we're going to maybe pause our spend, but they couldn't because they're an honest company and an Ashkenazi who's not going to let them do that. I mean, Carl, we sold down Nvidia because of a belief that you didn't need all this capex. So far, everyone has said they do. Amazon's the one that has the most that they're working on.