Feb. 5 at 3:08 AM
$MSFT $GOOG Part 2: I asked Claude: "it seems to me that Google had to spend more relatively to gain the edge this quarter -- had to sweat more thus gave up operating efficiency in the process to hit the higher growth numbers. thoughts?" Feedback: "Google is essentially "buying" growth. They're: 1)
Spending aggressively on AI infrastructure to close the cloud gap with Microsoft/AWS 2) Accepting margin compression as the cost of accelerating cloud from 30% to 48% growth 3) Betting that scale now will yield margin expansion later (the Amazon AWS playbook). Microsoft, by contrast, is harvesting — they built their AI/cloud infrastructure earlier, have better unit economics, and can now compound growth with fat margins. They're not "sweating" because they're ahead on the maturity curve. The Risk for Google: If the growth doesn't convert to durable margin expansion, they've just burned ~
$90B+ in capex with suboptimal returns. The 2026 guidance of
$175-185B is essentially a doubling-down..
