Alphabet Just Gave Nvidia Investors Some Great News
The Alphabet is now waiting to spend a capital of $ 85 billion this year – $ 75 billion, which has been planned earlier – and expects to accelerate these expenditures next year.
The AI CAPEX of Alphabet will be allocated to servers, accelerated data center structures and cloud information infrastructure.
Increased infrastructure expenditures from hyperskalers such as Nvidia and its developing GPU work.
For the next few weeks, companies will notify financial and business results for the second quarter of 2025. As usual, technology investors will focus on something: Artificial Intelligence (AI).
“Magnificent seven” member Alphabet He started something at the beginning of this week and reported solid results in search, advertising and cloud computing departments.
Although alphabet shareholders should be encouraged with the strong performance of the internet giant, Nvidia(Nasdaq: nvda) As the real winner of the company’s second quarter performance.
Let’s go into some of the important movements of the alphabet and evaluate how Nvidia benefits from them.
During the 2nd quarter call for earnings, Alphabet’s management updated some details. financial guidance. The Alphabet is now planning to spend about $ 85 billion for capital expenditures (Capex) in 2025.
And there’s more. “When we look at 2026, we expect more increase in Capex due to the demand from customers and the growth opportunities throughout the company.” He said.
Despite increasing aggressive expenditures by going to AI infrastructure for the last few years, the alphabet said he has not planned to slow down soon. This must be music in Nvidia’s ears.
Moreover, Goldman Sachs And Jpmorgan Productive AI can add that the global gross domestic product in the long term can add 7 trillion to $ 10 trillion.
From a macroeconomic perspective, these secular tendencies are good for Nvidia’s calculation and network empire. Moreover, I think that the decision of the alphabet to increase AI infrastructure expenditures adds some reliability to these industrial estimates again.
Alphabet’s management said it has raised Capex, which is planned to accelerate the construction of data centers and fill the increasing capacity demand on the Google Cloud platform.
Increased expenditures for network equipment, servers and cloud infrastructure should lead to increasing demand for graphic processing units (GPU). I still see this as a great positive development, as Nvidia still increases the production of chips made using the latest Blackwell architecture.
Considering that the Data Center GPU market has an estimated 90%, I see Alphabet’s investments in AI infrastructure as a large tail wind for the chip king and brings the company’s momentum on the competition in the chip area further.
Image Source: Getty Images.
Nvidia, which has a market value of $ 4.2 trillion, is currently the most valuable company in the world. Although this leads to the fact that the stock is expensive, the basic valuation tendencies tells a different story.
NVIDIA is currently traded on an advanced price-winner (P/E) floor of 40. Although this is not “cheap” by traditional criteria, NVIDIA is quite low from the peak levels that the NVIDA witnessed during the AI revolution.
What makes these dynamics interesting is that Nvidia’s growth orbit is much more powerful than 18 months ago when the advanced P/E valuation of today’s advanced P/E. The company remains at the center of the AI revolution and provides hyperskalers a large amount of fast parallel processing power and accelerates the AI workloads.
In my opinion, I see Nvidia shares from the current price of the brainless and rising AI infrastructure expenditures of the alphabet as a long -term catalyst that should not be ignored by growth investors.
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JPMorgan Chase is the advertising partner of Motley Fool Money. Man spatacco There are alphabet and nvidia positions. Motley Fool, Alphabet, Goldman Sachs Group, JPMorgan Chase and Nvidia have positions and recommends. Motley Fool’s Explanation policy.
