Key Points
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Nvidia and Micron are central figures in the AI industry, but Alphabet is starting to see significant returns on its investments in this space.
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As of October 2023, Alphabet’s Google Cloud is experiencing rapid growth, with an 82% revenue increase year-over-year, compared to other cloud providers.
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Alphabet has increased its capital expenditure guidance to between $195 billion and $205 billion by 2026 to support this growth.
Alphabet is positioning itself to potentially win the AI arms race by developing large language models and capitalizing on its Google Cloud services, which are in high demand among clients needing AI computing resources. As of 2023, Alphabet boasts a 36% operating margin in its cloud division, contrasting with Micron’s pressures from rising memory chip supply.
While Nvidia and Micron have gained traction in the AI market, Alphabet’s diversified approach and cloud growth strategy suggest a more sustainable long-term trajectory in AI profitability.
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