Google Cloud business increased by 82% year-on-year, igniting confidence in AI investment, and two major catalysts locked in future excess returns (Morgan Stanley)
Based on the strong growth of Alphabet's cloud business (annual revenue increased by 82%, backlog of US$514 billion) and the expansion of GenAI capital expenditures and opportunities, the Morgan Stanley report summarized four major business cognitions and two
Based on the strong growth of Alphabet's cloud business (annual revenue increased by 82%, backlog of US$514 billion) and the expansion of GenAI capital expenditures and opportunities, the Morgan Stanley report summarized four major business cognitions and two major future catalysts (Gemini 4 model and 2028 TPU opportunities). The market's attention on Google may be focused on search advertising, while ignoring the explosive power of its cloud business and the long-term value of its AI infrastructure. One-sentence conclusion: Google's AI story is being validated by the explosive growth of cloud business data, and market concerns about capital expenditures should not overshadow its improved long-term growth visibility. Good/bad: Good for Google (GOOGL). Market concerns about lower EPS and increased capital expenditures have been partially reflected in the stock price, but the super growth of the cloud business and the two major catalysts have not yet been fully priced. Catalysts: 1) The release and commercialization progress of the Gemini 4 model suite will directly affect the AI search experience and cloud service demand; 2) The detailed disclosure of TPU opportunities in 2028 will provide long-term growth visibility.