The Motley Fool·2025-11-03 08:10Core Insights - Alphabet reported its first $100 billion quarter, doubling its revenue from five years ago, with strong growth in Google Services and Google Cloud [1][2] - The company's earnings exceeded analysts' expectations for both revenue and profit, indicating robust performance [2] Alphabet and Nvidia Relationship - Alphabet utilizes Nvidia's GPUs through its Google Cloud business, which are essential for AI tasks like training large language models [3] - Nvidia's revenue has significantly increased due to its partnerships with cloud service providers like Alphabet, indicating a strong demand for its products [4] Capital Expenditure and AI Demand - Alphabet raised its capital expenditure forecast for the year to $91 billion to $93 billion, up from $85 billion, primarily to meet AI customer demand [5] - In the recent quarter, 60% of the $24 billion in capital expenditures was allocated to servers, with 40% for data center and networking equipment, benefiting Nvidia's infrastructure [5][6] Implications for Nvidia - The increase in Alphabet's capital expenditures alleviates concerns about potential slowdowns in spending, suggesting continued growth for Nvidia [7] - Nvidia's CEO projected that AI infrastructure spending could reach $4 trillion by 2030, making it crucial to monitor demand trends from customers like Alphabet [8] Competitive Landscape - Nvidia faces competition from companies like Advanced Micro Devices, but its commitment to innovation positions it favorably in the GPU market [10] - Despite potential competition, companies like Alphabet are likely to continue investing in Nvidia systems due to their superior performance [10] Investment Outlook - Nvidia is well-positioned for sustained growth as the AI sector expands, trading at 44x forward earnings estimates, which is considered reasonable given its market dominance [11]