Google cloud spending surges

https://www.barrons.com/articles/alphabet-earnings-beats-est…

Alphabet’s capital expenditures in the latest quarter almost doubled, as Google continues to build out data centers for products like its cloud services.
In the second quarter, those costs jumped to $5.48 billion from $2.48 billion a year earlier, Alphabet said in its earnings report after the close of trading on Monday. Analysts on average were expecting capital expenditures of $4.19 billion, according to FactSet.
The spending surge is the latest sign that Google’s cloud division, under the leadership of Diane Greene, remains committed to growth as it tries to chase down larger rivals Amazon and Microsoft. Google is also expanding its data centers for internal use, whether it’s search or YouTube.

That’s gotta be good for NVDA, PSTG and ANET.

27 Likes

That’s gotta be good for NVDA, PSTG and ANET.

Thanks GauchoChris. Is that because Google specifically partners with these companies or buys these products? Or do you also mean that other Cloud datacenter companies will also be increasing spending which will affect these companies?

AJ

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Hi AJ,

Is that because Google specifically partners with these companies or buys these products? Or do you also mean that other Cloud datacenter companies will also be increasing spending which will affect these companies?

It’s good for NVDA, PSRG, and ANET because Google is buying from them. Google is buying from them because Google’s customers want to do more and more machine learning and AI applications. One way for Google’s customers to do that is through Amazon’s AWS, Microsoft’s Azure, and Google. MSFT report amazing Cloud growth last week. Google reported huge increases in their Cloud spending. AI is growing FAST and NVDA, ANET, and PSTG (they are all offering different components used to build out data centers). FB will be reporting this week too. So far all signs look to accelerating data center buildout. I still think the market is underestimating the AI datacenter buildout and underestimating the coming boom from the edge. The market must be believing that NVDA’s 66% yoy revenue growth last quarter was a one-time pop. I think it’s unlikely and I think that NVDA could well report another blowout quarter on August 16th. We will see…

Chris

11 Likes

Buy the rumor, sell the news?

This is potentially a small little item, but could actually be of some note. NVidia’s Instagram feed put out a little image touting a partnership with Google Cloud about an hour or so ago. Having seen this post previously, Google’s cloud spending immediately came to mind. Perhaps NVDA is providing a small hint about their upcoming quarter (intentionally or not)?

https://www.instagram.com/p/Bln78qiHKmN/?utm_source=ig_share…

-volfan84
Long NVDA

4 Likes

Related to this topic, here is a Market Watch article from 3 pm today about NVDA and Google Cloud and the inferencing market.

https://www.marketwatch.com/story/nvidia-rides-the-next-wave…

The design win with Google Cloud validates Nvidia’s efforts and product capability in the inference field, continuing its directive of being a leader in AI.

volfan84

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During Nvidia’s Q1 call, they stated that Inference(for which that Tesla P4 is designed for) had “more than doubled sequentially from Q4” and that pipeline was being expanded for higher growth into Q2. Albeit from a probably a smaller base but sequential growths of greater than 100% lead to a sizable market pretty quickly.

Nvidia is aggressively pursuing the Inference market which is thought to be the largest piece of the AI pie yet to be baked. Those P4 and P40 cards are orders of 10’s multiple more efficient than CPUs which currently rule the market share for the fledgling Inference market.

If Google is putting these to market, you can bet other Titans will want in on that action too.

Darth

7 Likes

That’s gotta be good for NVDA, PSTG and ANET.
And Micron.
A