Nvidia estimates ‘may prove conservative’ as Microsoft, Google mentions of AI more than double


Microsoft Corp. and Alphabet Inc. mentioned “AI” so many times on their earnings conference calls that one bullish Nvidia Corp. analyst is beginning to think his above-consensus estimates may be too conservative.

Jefferies analyst Mark Lipacis, who has a buy rating on Nvidia
noted that mentions of artificial intelligence on both Microsoft’s

and Alphabet’s


earnings calls late Tuesday more than doubled from late 2022, implying that both companies are ramping up spending for infrastructure to handle the massive data loads required to support AI.

Lipacis noted that Microsoft’s capital expenditures for the June-ending quarter were up 24% at $8.9 billion, above the $8.3 billion Street consensus, and added that the company expects capex to accelerate in the current quarter “driven by broad datacenter capacity and hardware procurement including CPUs, GPUs, and networking equipment.” That acceleration could support about $40 billion in capex in fiscal 2024, compared with Street estimates of $32 billion, Lipacis said.


Alphabet, for its part, said AI is the primary driver of its capex growth. While Alphabet’s capex for the June-ending quarter was $6.8 billion, below the Street expectation of $7.9 billion because of “moderated office facility spending and delay in data center construction projects,” Lipacis said Alphabet’s largest component was in “servers with a meaningful increase in AI compute investments,” and that the company expected higher spending in the second half of the year.

Analysts surveyed by FactSet expect Nvidia to report earnings of $2.07 a share on revenue of $11.08 billion when the chip maker reports in late August.

Read: Microsoft’s AI payday will take time, and investors need to be patient

While Lipacis focused on how Nvidia stood to benefit, the analyst said that the commentary from Microsoft and Alphabet was also a positive for Advanced Micro Devices Inc.
Intel Corp.
Marvell Technology Inc.
and Broadcom Inc.
Intel reports earnings after the bell on Thursday, while AMD reports on Tuesday.


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