The Alphabet Aftermath: Your Next Move 7/23/26

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to most quarterly earnings...

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**Scott Wapner** (1:00)
I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.

**SPEAKER_1** (1:15)
All right.

**Dominic Chu** (1:16)
Thank you very much, Carl. Thank you, Sarah. Welcome to the Halftime Report. I'm Dominic Chu. In for Scott Wapner. Front and center this hour, the alphabet aftermath as more AI spending overshadows cloud growth and weighs on the markets. The Investment Committee is standing by with what it all means for your money. Joining me for the hour are Josh Brown, Malcolm Etheridge, Jim Labenthal and Jason Snyde. Let's get a check on the markets which are decidedly negative. Again, throughout the course of this session here, we've seen the markets move to the downside and now we're just bouncing off some of the lows. The Dow is down about 523 points, roughly 1%.
The S&P 500 down by about 1.3% to a level of 7,400. That big figure right there on the number and the Nasdaq Composite 25,089 off about 2.5% there.
Gentlemen, this is a down day. We've seen them before, but does this one feel different than other down days given the fact that it's being triggered by maybe arguably one of the Mag-7, if not two of the Mag-7? And then Jim, I'm going to start with you on this one here.

**Jim Labenthal** (2:17)
Well, I mean, okay, it's a down day and I get it. Alphabet's down and some people are worried about the capital expenditures. I'm not. I would also point out that as far as down days have gone recently, it's nice to show a little bit of sign of strength in something like Micron, some of the memory chips. Makes sense, right? If CapEx is going up at Alphabet, if they're not throwing in the towel because of Chinese open source large language models, then okay. It's game on for spending at Micron, which of course they have those long term contracts in place. Look, I get it. There are people who are worried that AI is a bubble. I certainly understand that. I'm more in the camp of the CEOs of these hyperscalers, the Brad Gerstners of the world, who all feel that at worst we're in the middle innings of this.
Yes, I get it. Political blowback against data center construction. Some people don't want them in their backyard. There's enough places to build these things, and clearly from Alphabet, we're going to continue to build them whether we like it or not.
I don't look at this as a bad sign. I look at it as the AI trade is alive and healthy.

**Dominic Chu** (3:19)
Josh, you either have to spend the money, you gotta spend the money, right? Because you position yourself for future growth, or you don't spend the money and are not positioned for that future growth down the line. It seems like a bit of a paradox. Is it one that is overall constructive over the medium term? Long term, we know it is. That's the future of technology, but short to medium term, how exactly then do you reconcile the paradox about spending versus positioning for growth down the line?

**Josh Brown** (3:46)
Okay, so two different answers to your question, and I know I have all the time in the world, right guys? We're good?

**Dominic Chu** (3:51)
Yes.

**Josh Brown** (3:52)
The first answer is, I've been talking about the second half as being a totally different environment from the first half, and in the second half, I think you want to focus on non-hyperscalers that are seeing business improvement in the form of upside earning surprises as a result of their uses of AI. I like this story so much better. This whole broadening out trade that we're living through in the markets, this whole shift away from Mag 7, from hyperscalers, and into other sectors, other areas, is being driven by this idea. There are companies that are demonstrating material progress in incorporating all of these AI tools that Alphabet and Meta are paying for, and they're able to tell the street, oh, by the way, this earnings beat sponsored by our use of blank.