Nvidia(US:NVDA)2025-07-01 02:24Investment Rating - The report assigns an "Overweight" rating to Alphabet Inc. (GOOGL) with an "Attractive" industry view and a price target of $185.00, indicating a potential upside from the current price of $178.53 [6]. Core Insights - OpenAI's decision to use Google Cloud's TPUs for its inference workloads is seen as a significant endorsement of GOOGL's technology infrastructure capabilities, highlighting GOOGL's leading position in the ASIC ecosystem [3][4]. - The partnership between OpenAI and GOOGL could drive further growth for Google Cloud, as rising developer familiarity with TPUs may lead to increased adoption outside of Google [4]. - The report notes that NVIDIA's capacity constraints may have influenced OpenAI's choice to utilize GOOGL's TPUs instead of NVIDIA's offerings [8][9]. Summary by Sections Partnership and Technology - OpenAI is reportedly finalizing a deal to use GOOGL's TPUs to meet its increasing inference demand and manage costs, although it will not have access to GOOGL's most powerful TPUs reserved for its own models [2][3]. - This partnership marks the first significant use of non-NVIDIA chips by OpenAI, emphasizing GOOGL's strong position in the ASIC market [3]. Market Dynamics - The report anticipates that while NVIDIA's GPUs will remain the primary choice for enterprises, the growing familiarity with TPUs could enhance GOOGL's Cloud business [4]. - Current estimates suggest that spending on NVIDIA GPUs will reach approximately $243 billion by 2027, while spending on TPUs is projected to be around $21 billion, indicating a potential market share shift for GOOGL [4]. Competitive Landscape - The report highlights that OpenAI's choice to use GOOGL's TPUs over AWS's Trainium could reflect AWS's capacity constraints, which may negatively impact AWS's growth prospects [9]. - The competitive dynamics in the cloud computing space are shifting, with OpenAI now utilizing services from multiple cloud providers, excluding Amazon [9].