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This earnings season, all eyes are on cloud revenue growth

AI computing demand is generating huge revenue streams for hyperscalers, but the market is closely watching the pace of growth, which is slowing.

Jon Keegan

This week, we’ll get an update on how many billions the cloud giants pulled in last quarter. AI has created an insatiable hunger for more cloud computing, and Amazon, Google, and Microsoft are racing to serve up computing capacity as fast as they can build the massive new data centers needed to catch up with demand.

As a result, the tens of billions of revenue that these tech titans are pulling in keeps going up.

At the same time, their customers are struggling to figure out a viable business model for the AI services they’re developing, and chatter about a possible AI bubble is getting louder.

That means as these tech giants report earnings this week, investors will be scrutinizing more closely how much money these cloud computing businesses are generating, and comparing the pace of growth.

Last quarter, Amazon CEO Andy Jassy tried to explain his company’s AWS cloud unit’s relatively slow revenue growth of 17.5% to analysts, saying that a small number of huge customers tend to spend in bursts, which will result in uneven growth. But overall, Jassy was bullish on the cost- and energy-efficient Trainium chips that Amazon is filling its data centers with.

Microsoft will update investors on Azure’s growth, its flagship cloud business and part of the “intelligent cloud” unit, which includes public, private, and hybrid server products and cloud services. Last quarter, Azure had revenue growth that was the envy of the industry, increasing 39% year on year. There was so much demand, the company had a backlog of $368 billion in signed contracts.

While smaller than Amazon or Microsoft, Google Cloud revenue grew a healthy 31.7% year on year. Google has recently been pitching its own custom chips to customers, putting it head-to-head with Nvidia.

Matt Phillips3h

Intel romps amid reported attempt to poach a 21-year Taiwan Semiconductor veteran

A report in the Taiwanese press that Intel is attempting to recruit a recently retired top Taiwan Semiconductor executive, Wei-Jen Lo, to lead R&D at Intel’s troubled foundry division may account for the bump in Intel shares Tuesday, one analyst told us.

A synopsis of the report from technology analysis and news outlet TrendForce News notes:

“If confirmed, the move could have significant implications for TSMC and the broader Taiwanese semiconductor industry, especially as Intel aggressively expands its foundry business with support from Washington and backing from tech giants like NVIDIA and SoftBank, the report adds.”

But some skepticism about Lo, 75 years old, returning to Intel, where he worked before joining TSMC in 2004, is also warranted, TrendForce says:

“Industry insiders cited by the report say it is unlikely he would join Intel again, given TSMC’s non-compete rules, Intel’s status as a direct competitor, Lo’s advanced age, health considerations, and his long-standing loyalty to TSMC founder Morris Chang. On the other hand, some industry observers warn that Lo, a U.S. citizen, would be difficult for TSMC to restrict, even with non-compete clauses.”

Intel shares have doubled over the last three months, since the US government took a 10% stake in the company in August. Intel is the best-performing stock in the S&P 500 over that period.

Intel Reportedly Eyes Retired TSMC Veteran Wei-Jen Lo, Advanced Node Pioneer, to Lead R&D

“If confirmed, the move could have significant implications for TSMC and the broader Taiwanese semiconductor industry, especially as Intel aggressively expands its foundry business with support from Washington and backing from tech giants like NVIDIA and SoftBank, the report adds.”

But some skepticism about Lo, 75 years old, returning to Intel, where he worked before joining TSMC in 2004, is also warranted, TrendForce says:

“Industry insiders cited by the report say it is unlikely he would join Intel again, given TSMC’s non-compete rules, Intel’s status as a direct competitor, Lo’s advanced age, health considerations, and his long-standing loyalty to TSMC founder Morris Chang. On the other hand, some industry observers warn that Lo, a U.S. citizen, would be difficult for TSMC to restrict, even with non-compete clauses.”

Intel shares have doubled over the last three months, since the US government took a 10% stake in the company in August. Intel is the best-performing stock in the S&P 500 over that period.

Rani Molla

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All eyes on Google Search revenue

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Jon Keegan6h

Nokia surges as Nvidia invests $1 billion in company, a 2.9% stake

Nvidia is taking a 2.9% stake in Nokia, as the Finnish mobile networking company has successfully pivoted to AI and data center technology.

In a press release announcing the deal, Nokia said:

“Nokia intends to accelerate development of Nokia’s 5G & 6G RAN software to run on NVIDIA’s architecture and will make investments to drive Nokia’s strategic goal of increasing its presence in the AI & Cloud market with data center aligned networking solutions within its Network Infrastructure business. Nokia and NVIDIA have agreed to collaborate on AI networking solutions and explore opportunities to incorporate Nokia’s data center switching and optical technologies in NVIDIA’s future AI infrastructure architecture.”

Nokia’s stock shot up over 20% on news of the deal.

Nvidia to Invest $1 Billion in Nokia in AI Networking Push

“Nokia intends to accelerate development of Nokia’s 5G & 6G RAN software to run on NVIDIA’s architecture and will make investments to drive Nokia’s strategic goal of increasing its presence in the AI & Cloud market with data center aligned networking solutions within its Network Infrastructure business. Nokia and NVIDIA have agreed to collaborate on AI networking solutions and explore opportunities to incorporate Nokia’s data center switching and optical technologies in NVIDIA’s future AI infrastructure architecture.”

Nokia’s stock shot up over 20% on news of the deal.

Rani Molla

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Slate trucks will use Yelp’s RepairPal network for service and Tesla’s Supercharger network

The “Tesla killer” will be using Tesla chargers.