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Let's take a look down at some stocks making news in the week ahead. I'm Nathan Hager with Man Deep Saying, globalhead of Tech Research at Bloomberg Intelligence. Great to have you on as we're going to be looking ahead to a lot more big tech stocks in the week ahead. What are we expecting when it comes to earnings from Google parent Alphabet?
Mandy?
Look, I mean what we saw with Meta was you know, accelerating top line growth, and in the case of Google, both the search business as well as the YouTube business have I would say modest expectations going in the quarter,
you know, low to mid teen's growth. So, I mean we've felt double digit growth for Alphabet over the last few or was very impressive given you know the threat from Chat GPT, but I think Meta has really raised the bar in terms of digital ad growth in the fourth quarter, So I would be looking for accelerating top line growth at least high teens growth for YouTube and you know, low to midteens growth for the core search business. Of Alphabet.
Since you mentioned meta platforms, we should say that the AI spend from Microsoft seemed to spook a lot of investors last week. Given that Alphabet has its Google Cloud business, could that be a concern for investors there when it comes to AI spend in the.
Cloud, You're right. I mean, what Microsoft Sprint has shown is you can't really miss the cloud growth numbers. So in the case of Alphabet, expectations or Google Cloud will have at least thirty five percent growth. And based on the work that we have done, I mean, Google really has had some very impressive, impressive deal wins this quarter in their cloud segments, so chances are they should do better.
And remember Google has their TPUs, so they shouldn't be as supply constrained as Microsoft probably was in the quarter with the GPU situation. So my guess is Google Cloud segment would see sequential acceleration and they should be the consensus number handedly And how.
Do you see Google's TPU processors fairing compared to the GPUs that we get from Nvidia.
I mean, if there's one theme that we have heard so far this earning season is AI infrastructure demand remains insatiable and all these companies are wanting to get as much you know, compute capacity as they can. So Google's TPUs you know, are used both internally for Google Overviews and across their family off app as well as they're
used on Google Cloud. And so from that perspective, I do think, you know, Google should be able to show the most efficiency when it comes to AI infrastructure, and that should get reflected in their gross margins, which I expect to be better than the rest of the hyperscalers.
We're also going to hear from Amazon this week they report their earnings. What are you expecting from their cloud unit AWS?
Yeah, I mean you want to see all these cloud companies show sequential acceleration. It didn't happen with Microsoft, hence we saw that negative reaction, and in the case of AWS, I would say expectations again are like for low twenty percent growth. So given they are the largest cloud provider, I mean they should be able to beat those numbers.
But look, what we have heard so far is supply constraints are real when it comes to AI compute capacity, and that may have a bearing on whether ADA BLUs ends up beating those consensus numbers or not.
Is low twenty percent enough to wow investors.
No, but you want to see that sequential acceleration. So I mentioned about the size of Ada BLUs, So that's almost one hundred and thirty five billion dollar rundrate business for Amazon. Contrast that with Microsoft, which is more one hundred billion, and Google Cloud is like sixty billion rund rates. So given their size, I mean, low twenty percent would be in line, but anything more than that would be impressive, and I think that would help those dock.
And along with Amazon and Alphabet. Another a in big tech reports this week advanced micro devices. How's the computer chip business looking right now, Mandy.
I mean, look, Meta just told us they planned to spend up to one hundred and thirty five billion dollars in CAPEX, which is a seventy percent increase from what they spent in twenty twenty five. So we were modeling like fifty percent increase in CAPEX from hyperscalers going into
twenty twenty six. Chances are that number will be revised upward, and so it will trickle down to the likes of AMD, which is the you know, the second biggest GPU provider after Nvidia, and so to my mind, AMDs deal with open Ai and some of the other business that they have won over the last few months should help, you know, exceed expectations when they print their results.
Does AMD need to show more market share compared to Nvidia.
I think this is such a big market that everyone is realizing that you don't need to, you know, win market share from Nvidia as long as you have a good product that you know companies are in trusted in buying. And open Ai has that deal with AMD. Now that is a big leap of faith in terms of MD's capabilities to supply six gigawatts of power that has all AMD chips, and I think that should help them win more enterprise business over time.
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