Artificial intelligence investment is accelerating across major internet platforms as companies race to expand computing power and support growing demand for AI services. Analysts say partnerships and infrastructure spending are shaping the next phase of growth for cloud and digital platforms.
BNN Bloomberg spoke with Ron Josey, internet senior analyst at Citi, who highlighted Amazon, Google and Meta as companies positioning themselves to benefit from rising AI demand and stronger engagement across their platforms.
Key Takeaways
- Artificial intelligence demand is driving a surge in capital spending as technology companies build computing capacity to support advanced AI models and services.
- Cloud platforms are becoming central to AI development as companies compete to provide infrastructure for large language models and enterprise AI workloads.
- Investors remain focused on the return on massive AI spending, particularly whether rising cloud and platform revenue can justify growing capital expenditures.
- Vertically integrated technology ecosystems — combining AI models, cloud infrastructure and consumer platforms — are strengthening the competitive position of major internet companies.
- Improvements in AI-driven recommendations and personalization are increasing user engagement, which supports stronger digital advertising performance.
Read the full transcript below:
ANDREW: Hot Picks today. We are zeroing in on internet stocks. Our guest has Amazon as his top selection and points to a multiyear partnership with OpenAI. He thinks it will enhance the already strong computing power of the company’s cloud business and also bolster its consumer franchise. Let’s get more from Ron Josey, U.S. internet analyst at Citi. Ron, great to see you. Thank you very much indeed for joining us. Just remind us, what is Amazon doing with OpenAI?
RON: Thanks for having me, Andrew. Look, Amazon is doing a lot of things with OpenAI. More recently, they announced an investment directly in OpenAI. When OpenAI was raising funds, Amazon became a pretty large shareholder. I think the investment could reach upwards of $50 billion over time, with about $15 billion committed so far.
But included in that deal was what I believe is about a $100-billion compute agreement over seven or eight years, which is more around the AWS side. OpenAI would rely on AWS compute capacity for its services and everything it’s building. OpenAI requires a lot of compute — I think we can all agree with that — and AWS and Amazon are now one of its main partners, in addition to partnerships with Google Cloud and Azure. The big news is that Amazon is now part of the mix here as well.
ANDREW: And is AWS the cloud business — is that the real driver for Amazon in investors’ minds right now?
RON: In the short term, yes. You used the term “right now,” and I think that’s the biggest debate. When you think about Amazon, you think about the capex the company is spending. I think they’ve said it could reach upwards of $200 billion this year. We think about $150 billion or so of that will be related to AWS.
The big debates I hear and have with my clients are around the return on investment. When can we start to see AWS revenue growth accelerate, specifically when can we start seeing AI demand ramping? We are starting to see revenue growth reaccelerate. We saw that in Q2 and Q3, and again in Q4.
The question is whether a mid-20 per cent growth rate is enough to support $150 billion-plus in capex. That’s the debate we’re having. We actually think there’s probably more upside to the growth rate than many expect.
ANDREW: Amazon stock is down about eight per cent this year, in line with the decline in the Magnificent Seven. Alphabet has been a relative star — Alphabet, or Google, is down only about two per cent — and that’s your next idea.
RON: Yeah. The thing with Alphabet is that they are very well vertically integrated and well positioned from a strategy perspective. If we take AI as a point of view, when you think about AI you think about a lot of things. One of them, increasingly, is Gemini.
Google’s Gemini large language model is among the best, if not the best. With that, they’re building out the Google Cloud platform and strengthening their Google Search business. When we think about AI as a percentage of total revenue, we see that continuing to grow and manifesting in accelerating search revenue and certainly accelerating Google Cloud.
To sum up Google quickly, they have the model, they’ve got their silicon with their TPUs, they have the platform, and increasingly they have the scale. When you put that together, Google is incredibly well positioned, and that’s why the stock has been acting a little better.
They are still down following earnings as there is some debate around pricing and how expensive the stock is from a valuation perspective. But we are willing to look beyond that because we think the numbers are likely to go higher, particularly on the profitability side.
ANDREW: And then finally Meta. Meta is down about four per cent this year, so relatively it has held up fairly well. Where is the big upside in Meta, do you think?
RON: The big debate on Meta is that they too are spending a good amount. Unlike Google and Amazon, which have hyperscaler businesses working with thousands — if not hundreds of thousands — of organizations to outsource compute, Meta does not have that.
Yet we’re expecting about $125 billion in capex this year based on our numbers. Investors are waiting to calculate the return on that investment. They are waiting for what could be a new product supercycle based on Meta’s investments in AI over the past year or so.
The good news on Meta, in our view, is that even though some of their newer models might be delayed or not yet ready for prime time, their core business is doing incredibly well.
When we think about their core advertising business, overall revenue growth is accelerating to more than 30 per cent — about 33 per cent in Q1. We think that’s a strong indication that once their large language models and AI systems are fully implemented, you could see sustained revenue growth rates higher than where consensus is right now.
But until we get there, that remains the debate on Meta, and maybe that’s why it hasn’t participated as strongly in the AI rally over the past couple of months.
ANDREW: Again, Meta is spending massively on AI, and you generally feel that’s going to pay off?
RON: We’re already seeing some incredible results from Meta even without their large language models driving that yet. Their ranking and recommendation models are improving almost every day.
As they improve, it means you and I and most users spend more time on the platforms because the content is better. As we spend more time, Meta gathers more signals about users that can help better target advertising.
They’ve been able to accomplish this without their most advanced models fully deployed. Once those models go live — which could happen in the next couple of months — we think you will see continued improvements in ranking and recommendation systems and perhaps even acceleration there.
The core business is operating really well. The next phase comes when these models launch, and we expect that in the next couple of months. When that happens, we should start seeing even better results from Meta.
ANDREW: Thank you very much. Really appreciate it.
RON: Thanks for the time.
ANDREW: Ron Josey is internet analyst at Citi.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AMZN NASDAQ | N | N | Y |
| GOOGL NASDAQ | N | N | Y |
| META NASDAQ | N | N | Y |
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This BNN Bloomberg summary and transcript of the March 13, 2026 interview with Ron Josey are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
