Alphabet's Artificial Intelligence (AI) Spending Spree Is Great News for Nvidia
The AI tailwind isn't over yet.
Overview
Last month, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) announced an $80 billion equity capital raise. The company made it clear that it was doing so to fund its aggressive spending on artificial intelligence (AI). While we can debate whether that's good for the company -- with some investors arguing that the massive spending won't pay off and will only squeeze its profits and margins -- there is one corporation for which this is a clear bullish sign: Nvidia (NASDAQ: NVDA). Read on to find out why.
Image source: The Motley Fool.
Alphabet's massive $80 billion AI infrastructure build-out will flow into several areas, probably including Nvidia's GPUs (Graphics Processing Units), which remain the workhorse of AI training. While it is true that Alphabet has sought to reduce its reliance on Nvidia's hardware, notably by doubling down on internally developed custom AI chips, management has been explicit that Nvidia's GPUs remain central to the company's business. As Alphabet's CEO, Sundar Pichai, said: "Nvidia GPUs are a core part of our AI accelerator portfolio." That should remain the case for the foreseeable future. So, Alphabet's increased AI spending is excellent news for Nvidia.
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Originally published at www.fool.com.