The Motley Fool·2025-08-30 08:10Core Insights - The "Magnificent Seven" companies are significantly influencing the current bull market, comprising over one-third of the S&P 500's total market capitalization [1] - Meta and Apple are expected to spend billions annually on AI, which could enhance stock performance for Alphabet in the coming years [2][13] Group 1: Meta's AI Investments - Meta has signed a deal with Alphabet's Google Cloud, committing to $10 billion over the next six years to secure necessary compute power for its AI projects [4] - Following a hiring spree, Meta's AI teams require substantial compute resources for various projects, including machine learning models and AI superintelligence [5] - The partnership with Alphabet is beneficial for both companies, as it helps Meta meet its AI demands while boosting Alphabet's cloud computing segment [8] Group 2: Alphabet's Growth and Revenue Potential - Alphabet has increased its 2025 capital expenditures outlook from $75 billion to $85 billion, indicating strong demand for its services [6] - The backlog for Alphabet's services reached $106 billion, and the additional $10 billion from Meta represents nearly a 10% increase in demand [6] - Alphabet's cloud computing segment is growing rapidly, with an operating margin of 21%, which could improve as it scales [7] Group 3: Apple's Potential AI Collaboration - Apple is considering using Google's Gemini for its AI-powered Siri assistant, which could lead to significant revenue for Alphabet [10][12] - Alphabet reportedly pays $20 billion to Apple for making Google the default search engine in Safari, indicating a lucrative relationship [9] - If Apple adopts Google's LLM for Siri, it could solidify Alphabet's position as the default search engine for Safari, despite ongoing regulatory scrutiny [11]