Tech Brew Ride Home - Is Software Eating The World Being Eaten By AI?

Episode Date: February 5, 2026

Alphabet earnings. Claude goes to the Superbowl. Why AI brand loyalty isn’t even remotely a thing yet. And is the whole Marc Andreessen theory of software eating the world in the process of being eaten by AI? Wall Street is worried about that very scenario. Google set to double AI spending to $185bn after strong earnings (FT) OpenAI Frontier is a single platform to control your AI agents (The Verge) Anthropic says ‘Claude will remain ad-free,’ unlike ChatGPT (The Verge) Microsoft’s Pivotal AI Product Is Running Into Big Problems (WSJ) New Data: OpenAI’s Lead Is Contracting as AI Competition Intensifies (Big Technology) Threat of New AI Tools Wipes $300 Billion Off Software and Data Stocks (WSJ) AI Won’t Kill the Software Business, Just Its Growth Story (WSJ) Learn more about your ad choices. Visit megaphone.fm/adchoices

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Google Fi Wireless is not subject to data traffic deprioritization during times of high network usage. Welcome to the Tech Brew Ride Home for Thursday, February 5th, 2026. I'm Brian McCullough today. Alphabet earnings. Claude goes to the Super Bowl. Why AI brand loyalty isn't even remotely a thing yet. And is the whole Mark Andreessen theory of software eating the world in the process of being eaten by AI? Wall Street is certainly worried about that very scenario. Here's what you missed today in the world of tech. Cap table management. Who needs it? Well, you probably do, but that doesn't mean it should drain. your time or derail your budget. Pooley knows there's a better way.

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They're still growing, still making money. Though the stock is down 5% today, I'm not sure if that's related to broader market issues or not. Anyway, what I found pertinent to our interests is Alphabet is increasing its 2026 Cappex forecast to between $175 and $185 billion. That is up from the 91.4.4.4. $4 billion they spent in 2025, so they too are putting the pedal to the metal in terms of AI spend. Quoting the FT, Google said it plans to double its capital expenditure this year to as much

as $185 billion as strong growth in its advertising and cloud businesses added to the search giant's financial firepower for its huge bet on AI. Chief Executive Sunar Pachai has argued that its huge AI investments were supported by big jumps in earnings and cash flow as its advertising revenue continues to climb, and AI demand lifted its cloud computing arm. Our KAPX spend this year is an eye toward the future, he said. The demand we are seeing across the board for our services and what we need to invest in Google DeepMind and in cloud is exceptionally strong. Pajai said that despite the big investments in data centers and its own custom AI chips

known as TPUs, he still expects demand from its deep mind research lab and from customers to outstrip the new computing power it can bring online. investors have been sensitive to trends in AI spending with fears spreading about a bubble developing in public and private markets as revenues lag far behind the cash being pumped into the technology. When Microsoft also disclosed a big jumping CAPEX last week, now set to exceed $140 billion this year, its shares fell by more than 10%. By contrast, meta rose, even as it forecast annual CAPEX of $135 billion because the social media giant was able to show that AI was improving advertising efficiency, end quote. By contrast, meta rose even as it forecast annual CAPEX of $135 billion because the social media giant was able to show that AI was improving advertising efficacy, end quote. Google also said that its Gemini app has more than 175 million monthly active users up from

650 million in November, and its first-party models now process more than 10 billion tokens per minute via direct API use by customers. Also, quoting variety. YouTube generated more than $60 billion in revenue for 2025, including both advertising and subscriptions, the first time parent company Alphabet has broken out total revenue for the platform. That makes YouTube much larger than subscription streaming leader Netflix, which reported $45.18 billion in revenue for full year 2025. Indeed, the top line number for YouTube was more than any other entertainment company except Disney at $75.7 billion in revenue for calendar year 2025. YouTube Shorts, the platform's short-form video format now averages 200 billion daily views,

according to Google's Neil Mohan, end quote. OpenAI has launched Frontier, an AI agent management platform that provides shared context, onboarding, and permission boundaries for a limited set of customers. Quoting the verge, managing humans is hard, managing AI agents is also hard. That's why OpenAI is launching a new platform called OpenAI Frontier, which it says will help businesses build, deploy, and manage AI agents even those not made by OpenAI itself. OpenAI's description of Frontier sounds something like HR for AI. Frontier gives agents the same skills people need to succeed at work, shared context, onboarding, hands-on learning with feedback and clear permissions and boundaries. OpenAI wrote in a blog post, the similarity makes sense. OpenAI said the product was

inspired by looking at how enterprises already scale people. Frontier is available today, though only to an unspecified limited set of customers with broader availability coming over the next few months. OpeningI. said Intuit, State Farm, Thermo Fisher, and Uber are among the first companies to adopt Open AI Frontier with dozens of existing customers, having piloted it as well. It's not clear how much Frontier will cost either in a press release. The chief revenue officer Denise Dresser declined to disclose pricing at this point in time. Frontier is an agent interface, said Barrett Zoff, OpenAI's general manager for business to business, who recently returned to Open AI after a stint at Thinking Machines Lab. Right now, many companies simply

run AI agents on top of whatever they're using, which often means fragmented tools, disconnected workflows, and silo data. Frontier sits on top of that to create a shared business context for agents, connecting them with everything needed to work and communicate effectively. These connections mean deployed agents can operate across different environments, though OpenAI said Frontier also lets users set boundaries, making it possible to use them confidently and sensitive and regulated environments. Frontier will also make it easy for human teams across organizations to hire AI co-workers for tasks like running code and data analysis. OpenAI said agents will also build memories and can be evaluated by human workers, which should make them more useful over time.

The end goal for OpenAI sounds suspiciously similar to Sauron's motivation in the Lord of the Rings, one platform to rule them all. By the end of the year, most digital work in leading enterprises will be directed by people and executed by fleets of agents, said Fiji Simo, OpenAI's CEO of applications, and what I dreamed of was having one platform to create and manage all of our agents. Interestingly, this means a recognition that we're not going to build everything ourselves, said Simo. Frontier will use open standards and can be populated with agents built by OpenAI, the enterprise customer, or another AI company, end quote. Anthropics says Claude will remain ad-free. Its users, quote, won't see sponsors

links adjacent to conversations and responses won't be influenced by advertisers. Quoting the Verge. The announcement goes on to highlight exactly why including ads would be, quote, incompatible with what we want Claude to be. It suggests the profit incentive could interfere with providing the most helpful advice to a user asking about health problems like sleeping issues, and that ads might prove a distraction for anyone using Claude to work. That said, Anthropic does make sure to leave the door open for a reversal.

Should we need to revisit this approach, will be transparent about our reasons for doing so. In about face, a few years down the line might look hypocritical in light of the new Super Bowl ad the company is releasing to highlight its announcements. It's one of four commercials released so far on YouTube along the same theme with humanized AIs dropping adverts in the middle of their advice. The Wall Street Journal reports that a shorter 30-second version of this spot will air during the game on Sunday with a separate minute-long commercial featuring ad-enabled AI therapist during the pregame show. None of the ads call out chat GPT by name, but their target is obvious, end quote. Obvious enough, to Sam Altman at least, that he tweeted, quote, first, the good part

of the Anthropic ads, they are funny, and I laughed. But I wonder why Anthropic would go for something so clearly dishonest. Our most important principle for ads says that we won't do exactly this. We would obviously never run ads in the way Anthropic depicts them. We are not stupid, and we know. know our users would reject that. I guess it's on-brand for Anthropic Double-Speak to use a deceptive ad to critique theoretical deceptive ads that aren't real, but a Super Bowl ad is not where I would expect it, end quote. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds.

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I guess I shouldn't be. since this is also new, so no brands have solidified in the marketplace yet. It reminds me of the search engine wars of the 90s or the productivity app wars of the 80s. Let me give you an example. According to Recon, the U.S. market share of co-pilot as paid users' first choice for an AI chatbot fell from 18.8% in July 2025 to only 11.5% in January of this year, while Gemini's rose from 12.8% to 15.7%. Quoting the journal.

Confusing brand positioning and interoperability problems have frustrated users, current and former employees who have worked on Microsoft's AI products said. Only a small proportion of subscribers to Microsoft's Enterprise Suite use copilot and the percentage of those who favor it over Google's Gemini or other tools has decreased in recent months, according to data reviewed by the journal. We have moved past the initial phase of discovery of AI, Sacha Nadella wrote in a December blog post, adding that the industry was entering a phase where we are beginning to distinguish between spectacle and substance.

Chad a Morganlander, senior portfolio manager at Microsoft Investor Washington Crossing Advisors, said that while co-pilot is struggling now, our bet is they have this embedded client base and that they will get it wrong until they get it right. They have plenty of money for the marathon. Microsoft has several versions of copilot that are woven into apps and services, including its 365 productivity tools such as PowerPoint and the GitHub developer platform. There is also a consumer-facing version available through its edge browser and via an app. The different co-pilots are divided into three main categories.

The enterprise tools, Microsoft sells to companies and professionals, co-pilots for developers and IT personnel, and the general consumer chatbot led by Microsoft AI CEO Mustafa Suleiman. Last week, Microsoft 365 co-pilot, quote, seats. Its Microsoft 365 business had a base of 450 million plus paid seats overall. The company late last year said it had more than 150 million monthly active co-pilot users across its first-party platforms. Google's Gemini has more than 650 million monthly users, while ChatGPT has about 900 million weekly active users, end quote. Data point number two, according to Aptopia, ChatGPT's U.S. market share fell from 69.1% to only 40,000, to only 40,000. 35.3% from January of last year to January of this year. Gemini rose in that same time period from

14.7% to 25.1% percent. Grock rose from 1.6% to 15.2%. This is from our friend Alex at Big Technology, quote. The data obtained by Big Technology from Mobile Insights firm Aptopia indicates the chatbot race has tightened meaningfully over the past year with Google's surge showing up in the numbers. Overall, the chatbot maker increased 152% since last January, according to Apptopia with ChatGPT, exhibiting healthy download growth as well. On desktop and mobile, a similar pattern appears, according to analytics firm's similar web, visits to ChatGPT went from $3.8 billion to $5.7 billion between January of last year and January of this, a 50% increase, while visits to Gemini went from 267.7 million to $2 billion, a 647% increase.

Chat GPD is still far and away the leader in visits, but it has company in the race now. Chat GPD showed really strong growth for most of 2025, said David Carr, Insights News and Research Editor at Similar Web. That said, we did see a chat GPT traffic dip in November, December, which coincided with a growth spurt for Gemini. Preliminary data for January show chat GPT traffic recovering, but not back to its peak of six billion-plus visits in October. and Gemini continues to grow strongly up another 17% month over month based on a preliminary estimate for January. After experiencing Torrid growth through most of 2025, the Chapot market itself leveled off somewhat in recent months. The market is flattening a bit, said Aptopia Director of Public Relations Adam Blacker. We likely have not hit peak gen AI apps, but this is an early inflection point where there may be a gap between early adopters and everyone else.

There's also evidence that the chatbot race is not zero sum. 20% of chatbot users were using at least two apps by the end of 2025 up from 5% at the end of 23. And finally, pure user numbers don't tell the full story since users spend different amounts of time with each chatbot on average. Even though Anthropics Claude doesn't have close to as many users as Chatutee or Gemini, the time people spend with it has surged from about 10 minutes daily in June 2025 to more than 30 minutes daily today, end quote. Finally today, software and data stocks have been plunging all week

over fears that new AI developments will supplant software in terms of importance or making money, etc. Adobe closed down 7.3%. Sales force is down. Thompson Reuters is down as much as 15%. Quoting the journal. On Tuesday morning, investors homed in on Anthropics announcement that it was adding new legal tools to its co-work assistant, meaning that it would help automate a number of legal drafting and research tasks. Shares of Thompson-Broiders, LegalZoom, and the London Stock Exchange, which all provide some form of legal tools or research databases, all fell more than 12%. By afternoon trading, the downturn had swept through the broader software market, PayPal, Expedia, E-PAM systems, Equifax, and Intuit were among the hardest hit, all dropping more than 10%. A pair of

S&P indexes that track software, financial data, and exchange stocks lost a combined total of around $300 billion in market value. If things are advancing as rapidly as we hear from OpenAI and Anthropic, it's going to be a problem. Investors are starting to go after any of the companies that could be disrupted, which is all kinds of software application names, said Art Hogan, Chief Market Strategist at B. Riley wealth management. Even before Tuesday's drop, Software and Service was S&P Dow Jones Indices' worst-performing subsector this year. Private fund firms, which invested heavily in software equity and debt in recent years, also suffered in the sell-off.

Private equity managers snapped up software companies over the past decade, often borrowing money from private debt funds to pay for the buyouts. The flurry of deals left software as a significant slice of their investment portfolios. Software was supposed to eat the world, as tech investor Mark Andreessen once predicted, and until recently, the industry's growth made for profitable investments. Now, with the industry under pressure from AI, some of those software holdings have drawn scrutiny. I don't view this as a private credit or liquidity issue. John Gray, Blackstone's president and chief operating officer said at the Wall Street Journal

Invest Live event on Tuesday, it's the change happening in the economy. You could be an incumbent software company that's the system of record, and maybe you face risk from AI disruptors. software now accounts for about 20% of investments in business development companies or BDCs, a booming type of private credit fund. That compares to around 10% in 2016, according to research by Barclays, end quote. But in a different piece, a different journal writer took the opposite position, quote, the belief that major corporations will replace highly complex software platforms with vibe-coded apps is a stretch. Such platforms run mission-critical tasks like payroll and IT management and require deep, subject-matter,

that goes well beyond the actual coding of the software itself. Even the key enablers of today's AI industry seem to agree. There's this notion that the software industry is in decline and will be replaced by AI, NVIDIA chief executive Jensen Huang said on stage at Cisco Live on Tuesday, it's the most illogical thing in the world and time will prove itself. The sell-off could open the door for private equity buyers who like to snap up software companies. Then again, many of these firms were themselves caught up in Tuesday's sell-off due to their existing software exposure. They might not be eager to increase that now. Valuations are certainly

compressed. The average multiple of companies on the IGV index has collapsed from 39 times forward earnings to about 21 times now, according to data from FACSET. But those figures are mostly based on analyst estimates that exclude stock-based compensation, which can be deceptive in an industry that deploys it so much. AI won't eliminate the need for specialized software platforms, but survival alone isn't enough to clawback recent losses, end quote. Oh my God. It's not just that Arsenal won the game the other day, but it was also that they won the game with a goal in the very last minute. My son was absolutely 100% focused on the pitch, on the game for the entire time. His eyes never left the pitch for two hours.

And then the delirious celebrations at the end where complete strangers were hugging him and everyone around us and everyone around us was singing North London forever, and he was holding up his arsenal scarf singing along with everyone else holding up their arsenal scarves, and then the train cars filled with people singing about going to Wembley. On the way home, dear listener, it could not have gone better for his first ever arsenal match. Thank you, Arsenal, thank you, Kai Havert. Talk to you tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination, nation for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th,

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