Alphabet Increases AI Investment, Boosting Outlook for Nvidia
Alphabet has raised its capital expenditure guidance to between $195 billion and $205 billion by 2026 from a previous range of $180 billion to $190 billion. This significant increase reflects the company's aggressive investment in AI infrastructure, driven by strong demand for cloud services and AI models that is outpacing supply. Alphabet’s Google Cloud revenue grew 82% year-over-year to $24.8 billion with a backlog of $514 billion as of Q2. CEO Sundar Pichai highlighted the need to scale up infrastructure rapidly, which could lead to increased purchases of Nvidia's AI chips. This development is seen as positive for Nvidia, given Alphabet’s potential to become one of its largest customers. Nvidia recently began volume production on its next-generation Vera Rubin chip platform and plans shipments this fall. Analysts project strong earnings growth ahead for the company, with a median 12-month price target suggesting significant upside.
Topics: AI capex guidance cloud revenue