GOOG News

[Adam Kay]

Of the $180B 2026 Capex, $110B will do towards racks scale build out, split roughly 50/50 GooG/GCP. I would estimate the following recipients of this cash pile. The clear winners being NVDA/AVGO

[Adam Kay]

Googles own roadmap, clearly showing MORE memory utilisation in successive TPU designs. Wasn't TurboQuant going to wipe it out

[Adam Kay]

CEO Sundar Pichai framed the quarter as AI-led across the portfolio, saying, "It's clear that our AI investments and full stack approach are driving performance across our business," and added that in Search, "AI continues to drive search usage and queries are at an all-time high."

Pichai highlighted cloud demand and commitments, stating, "Cloud accelerated again this quarter due to strong demand for our AI products and infrastructure," including that revenue "grew 63%, exceeding $20 billion for the first time" and that "our backlog nearly doubled quarter-on-quarter to over $460 billion." NB- new business contracts during the quarter +> $230B!

On product and model momentum, Pichai said, "Overall, the number of paid subscriptions has now reached 350 million," and added, "Our first-party models now process more than 16 billion tokens per minute via direct API use by our customers, up from 10 billion last quarter." +60% QoQ growth

Capex raised +$10B to 180-190B in 2026 and 'our 2027 Capex will increase significantly over this.

[Adam Kay]

And some say AI isn't being monetised

Anthropic has reportedly agreed to spend around $200 billion over five years on cloud infrastructure and AI chips from Google, highlighting the intensifying race for computing power in the artificial intelligence sector. According to the report, this deal would position Anthropic as one of the largest customers of Google Cloud, potentially representing more than 40% of its revenue backlog.

The scale of this commitment reflects rapidly growing demand for high-performance computing, driven by the expansion of Anthropic’s Claude AI models and increasing enterprise adoption of generative AI tools.

Businesses are relying more heavily on such systems for automation, analytics and customer-facing applications, which in turn requires vast processing capacity.
The agreement, signed in April, also includes access to advanced tensor processing units, with contributions from partners such as Broadcom.

Deployment is expected to begin around 2027, signalling long-term strategic investment in AI infrastructure.

[Adam Kay]

Reporting tonight. I think it will be a record:

Consensus: ~$117B revenue and ~$2.88 EPS.
I expect: ~$120B revenue and ~$3.10 EPS.
I expect Google Cloud growth of 65–70%.
AI capex. I expect another increase. Something north of $100B annualised, $25B next Q+.
I expect HBM memory to get a shout out

Net Income from operations circa $37B +$20B unrealised gain from investments.
NB- The above is operational. In addition they will likely report a circa $20B gain on SpaceX mark to market

The headline might state $5 ish-if it does that include the revaluation of the SpaceX holding.

[Adam Kay]

Estimated growth in Google Cloud Platform (GCP). This is a 30% boost to company wide earnings. If this proves correct-it's huge and there is no denying how impressive the actual growth has been. A 4X increase in growth run rate.

[2BToo]

And, as usual, there's a chunky dip in GOOG share price immediately after good results.

I think I'm learning something about this game in that I come to expect this, but still don't understand why it happens. Is anyone able to explain this (using small words)? Thanks!

[Slow Horses]

@2BToo two words: Retail Investors (in my small mind anyhow)

[Adam Kay]

Because the market is obsessed with capex spending. GOOG is spending ALL their money and more(borrowing+capital raising) to fund their AI aspirations. They are generating record earnings, have a massive backlog and clear blue-sky ahead as evidenced in the above post. They have $514 billion in outstanding contracts to supply compute-what are they expected to do. Turn the business down? Of course they need to perform on those contracts and to do so they need to spend a lot of money to build the capacity to service these customers.

If the market doesn't like it 'today' they will, imo, wish they had, 'tomorrow'

NB-and despite the backlog being staggeringly huge, they are expected to add another $250B in the near term whilst delivering on that RPO in the 100B+ range at least over the same period.

As we have discussed previously, based on what Nvidia and TSMC and MU (10s of large companies) are saying(and doing). The AI factory build out will take another 5-8 years and then need maintaining. I've posted many slides showing 2027 is 50% over 2026 capex spending. It's accelerating. If stockholders don't like it, don't buy the stock only to be surprised when they spend more. It's happening. The companies are being completely transparent so it beggars belief that it surprises anyone.

The entire global supply chain is firing on all cylinders and has been for 18 months. And in the back ground are the FUD peddlers, pumping out articles to manipulate the naive into thinking it has peaked, it makes no money, Nvidia have chip problems, China is coming blah blah. It's all nonsense.

Anyone remember the 'Dean of valuation-the prof' 3 years ago he said Nvidia was worth $4 when the stock was trading at $24 and all the evidence suggested it was going higher. How many people did he induce to sell.

[mikeiow]

@2BToo said in GOOG News:

And, as usual, there's a chunky dip in GOOG share price immediately after good results.

I think I'm learning something about this game in that I come to expect this, but still don't understand why it happens. Is anyone able to explain this (using small words)? Thanks!

I’ve probably mentioned before, but I spent over 20 years with a ‘unicorn’ US company….& it never failed to perplex me how we could have a stunning quarter and the. watch the share price immediately dip, or a poor to average one & see things rise 🤪
No logic!