Google logo. Reuters/Yonhap
Google, one of the three major hyperscalers—operators of large-scale computing infrastructure—leading the global artificial intelligence (AI) market, has again raised its planned AI investment for this year. With quarterly earnings showing robust AI demand, the company decided to increase capital expenditure to among the highest levels in the industry. While Google’s stock stumbled, the increased investment is expected to serve as a boon for memory manufacturers, including key supplier SK hynix (000660), as well as Samsung Electronics (005930) and Micron.
Alphabet, Google’s parent company, said on the 22nd that its second-quarter (April-June) revenue rose 24% year-on-year to $119.8 billion (about 175.735 trillion won). The gain was largely driven by cloud revenue—referring to large-scale virtual space connected via the internet—which surged 82%, beating expectations for the first time in a year.
Cloud order backlog, or contracted volume not yet recognized as revenue, stood at $514 billion, a sharp increase from $460 billion in the previous quarter. Alphabet CEO Sundar Pichai said in a conference call after the earnings release, “The strong performance in the cloud segment was driven by strong demand for AI infrastructure and AI solutions.”
Having confirmed AI demand, Alphabet again raised its capital expenditure for this year to fulfill the contracts it has secured. Capital expenditure, initially presented at $175 billion to $185 billion at the start of the year, was raised to $180 billion to $190 billion at the first-quarter earnings announcement, and this time jumped to $195 billion to $205 billion (about 285.98 trillion to 300.61 trillion won). The figure exceeds that of Amazon, which had the highest investment among major hyperscalers at $200 billion. However, despite the strong performance, Alphabet’s stock fell about 3% in after-hours trading after it was revealed that its free cash flow stood at negative $5.9 billion.