Nvidia Investors Receive Positive Update from Alphabet
Alphabet's AI Spending Boosts Nvidia's Growth and Stock Performance
In a move to meet the rising demand for cloud computing capacity, Alphabet has announced plans to increase its capital expenditures (capex) and accelerate the construction of data centers on the Google Cloud Platform. This decision could have significant implications for Nvidia, a company at the heart of the AI revolution.
According to Goldman Sachs and JPMorgan, generative AI could add between $7 trillion and $10 trillion to global gross domestic product in the long run. With nearly half of this predicted spending allocated towards AI hardware, the increased capex at Alphabet could sustain Nvidia's sales growth.
Nvidia, currently the most valuable company in the world with a market cap north of $4.2 trillion, dominates about 90% of the data center GPU market. This market dominance makes Alphabet's investments in AI infrastructure a major tailwind for the company.
The surge in AI spending is part of a broader trend among big tech firms investing hundreds of billions into AI infrastructure. McKinsey & Company forecasts that AI infrastructure spending could reach $6.7 trillion by 2030.
Alphabet plans to spend around $85 billion on capex in 2025, a $10 billion increase over its prior guidance. This increased spending by Alphabet on network equipment, servers, and cloud infrastructure is expected to lead to rising demand for graphics processing units (GPUs), crucial components in AI data centers.
Nvidia's growth trajectory is arguably stronger today than it was 18 months ago. Despite its high market cap, the underlying valuation trends of Nvidia suggest that the stock might not be as expensive as it seems. Buying Nvidia stock at its current price is seen as a no-brainer by growth investors, with Alphabet's rising AI infrastructure spending being a long-term catalyst that should not be overlooked.
Alphabet's CFO, Anat Ashkenazi, expects a further increase in capex for 2026 due to customer demand and growth opportunities. This continued investment in AI infrastructure construction by Alphabet is expected to lead to sustained demand for Nvidia's GPUs, further boosting the company's growth and stock performance.
In conclusion, Alphabet's aggressive AI infrastructure spending acts as a major growth driver and tailwind for Nvidia. By intensifying demand for GPUs essential to AI computing, this spending supports Nvidia’s business expansion and stock performance in the expanding AI ecosystem.
Finance experts predict that the increased capital expenditures (capex) by Alphabet will fuel technology spending, particularly in artificial-intelligence (AI). This is expected to drive demand for money invested in Nvidia, a tech company dominating the data center GPU market with a 90% share.
With approximately $7 trillion to $10 trillion in untapped potential from generative AI added to global gross domestic product in the long run, the increased capex at Alphabet could significantly stimulate Nvidia's sales growth.
The surge in AI infrastructure spending by tech giants like Alphabet, which plans to spend around $85 billion on capex in 2025, signifies a growing investment in finance towards technology and AI. These activities make Nvidia stock an attractive choice for growth investors, who see it as a long-term investment bolstered by Alphabet's rising AI infrastructure spending.
