NEW YORK, Feb 7, 2026, 07:38 EST
- Google now expects 2026 capital expenditures of $175 billion to $185 billion, putting a new spotlight on data-center chip suppliers.
- Jefferies stuck with its buy call on Broadcom, holding the target steady at $500. That points to about 60% upside from where shares finished on Wednesday.
- Nvidia and other chip names have lost ground, despite bigger AI spending plans. The group isn’t moving in sync.
Broadcom shares climbed after Alphabet’s Google outlined a much larger data center spending plan for 2026. Analysts pointed to the move as a factor that could sustain demand for custom AI chips and networking hardware.
Timing is crucial here: Wall Street’s using Big Tech’s capital spending as the main signal for the AI boom’s staying power—or the risk it sours. These days, the figures are massive. Any suggestion that returns won’t keep up with the spending, and investors have been quick to push back.
The AI rally has clearly created two camps: winners are pulling ahead, laggards left behind. Certain chip stocks keep attracting those “picks and shovels” bets after any spending news. Others, though, are just getting dragged down with tech’s broader decline.
Jefferies is sticking with its buy call on Broadcom, citing the chipmaker’s strong position as AI infrastructure spending ramps up, CNBC reported. Analyst Blayne Curtis set a $500 target—suggesting the stock could jump 62% from Wednesday’s $308.05 close. 1
Google’s capital-expenditure outlook for 2026 just shot up to $175 billion-$185 billion, with the lion’s share headed for data-center servers and chips, according to D.A. Davidson’s Gil Luria in a chat with MarketWatch. Luria sees this as “the biggest increase we have seen on data-center spend since the beginning of the AI investment cycle,” pointing mostly to chips—Google’s own TPUs plus Nvidia’s GPUs. Jefferies’ Curtis called the capex surge “a significant vote of confidence for AI spend moving higher.” Richard Windsor at Radio Free Mobile put it bluntly: Google’s suppliers come out “the big winners in the short term,” while Google itself grabs “a colossal advantage over OpenAI.” 2
Broadcom picked up around 2% in early Thursday trading, according to MarketWatch. Nvidia and Advanced Micro Devices gave up earlier advances, sliding into the red and deepening their recent losses. Micron Technology and Sandisk moved lower as well.
Broadcom’s relationship with Google keeps drawing investor attention, thanks to years spent developing custom TPUs—chips tailored for targeted AI tasks. These belong to the ASIC, or application-specific integrated circuit, category; unlike general-purpose chips, ASICs tackle specialized jobs.
Yahoo Finance ran a commentary suggesting Broadcom might take the lead in 2026, with the AI market moving away from generic processors and leaning into custom chips. Broadcom’s management, according to the article, forecasts that revenue from AI semiconductors will double next quarter compared to a year ago. 3
The path forward isn’t without obstacles. Curtis flagged two points hanging over Broadcom: uncertainty about how long AI spending will hold up, and the possibility that major customers start bringing more chip production tasks inside — what he calls “customer-owned tooling.” That shift could put pressure on partners in charge of sourcing, testing, and shipping.
Google’s TPU efforts aren’t immune to new rivals edging in. Windsor pointed out that suppliers like Broadcom, Nvidia, and Taiwan’s MediaTek all figure into Google’s mix. Reports that Google is eyeing MediaTek for TPUs, he said, underline how even within one major customer, share can shift.
The burst in spending is colliding with a market increasingly wary of the price tag. Amazon dropped 9% on Friday after disclosing a planned $200 billion capital investment. Reuters reports U.S. tech giants are now prepared to commit over $630 billion to data centers and AI chips. “While the rising capital intensity is not a surprise directionally, the magnitude of the spend is materially greater than consensus expected,” MoffettNathanson analysts said. 4
So far, Google’s ramped-up capex outlook keeps hardware front and center. The real test: does this spending spree boost more chipmakers than just a select few, or are we looking at an uneven patch where even Nvidia stumbles as tech giants sign off on record-sized bills?
