00:00 Speaker A
about this. Maribel, we heard the cloud growth from Microsoft recently that kind of disappointed investors, right? So, what are you expecting to hear from from Amazon and Alphabet this week?
00:22 Maribel
Well, we’ve been looking at double digit cloud growth for many quarters right now, and I think the desire is always to have that in the high 20s, high 30s. It’s getting hard at this point. Uh what we’re looking at is that pace of like can AI drive more cloud revenue growth and it just doesn’t seem to be hitting it at the expectations that we had anticipated, say three, four quarters ago. So I think it’s very tenuous right now.
00:55 Speaker A
And and how should we be thinking about AI, the relationship between AI and that cloud revenue growth at this point?
01:07 Maribel
So for the past several years, what we’ve really seen is investment, investment, investment, and the investment has always outpaced the revenue. That does have to happen, but I think there is uh limited investor willingness to continue to just see billions and billions of dollars put in but nothing coming back out. So the question becomes is this like a 10-year game before we see real AI cloud growth revenue, or is this something that we see in the next coming year or two years? Now, every hyperscaler tells you that they have AI cloud revenue growth. The question is not do they have it. The question is whether it’s enough to justify the investment that they’re putting into it.
01:47 Speaker A
And do you think are these companies doing a good enough job at communicating that to investors, what that potential return on investment could be? Or is it just that like they don’t really know and it’s tough to to predict it?
02:00 Maribel
I think the reality is we don’t really know. It’s starting to get embedded into so many applications and services that it’s hard to parse out like what is going to be specifically the hyperscaler’s part of that. You know, how much investment we’re seeing in these models. It seems that the past week all we’ve talked about is how many billions of dollars companies are are going to invest in Open AI right now, and that seems to be where all the heat and light is. And that is because that particular company is considered to be still a leader in enterprise and consumer adoption for AI services. So everybody has vested interest in making sure this company is successful, but they’re not really sure on the other half of that, what that revenue is going to look like for them specifically.
02:47 Speaker A
Well, and it’s interesting that you bring up up an AI, you know, we’ve had a handful of other announcements over the past week, including the um report that Amazon is looking at investing in Open AI, including that Nvidia has said, well, the 100 billion that we talked about is going to be in tranches, it’s not set in stone. And meanwhile, here’s Alphabet with, you know, with Gemini that has been gaining some steam. So, how are you thinking about that sort of horse race?
03:11 Maribel
I think Alphabet is actually a uh sleeping horse right now. People don’t seem to look at them in the same regard that they look at AWS. and I think what we’re going to see is increasingly they are winning AI workloads. They’re considered very innovative in AI. A lot of companies have actually done a lot of deep analytics with them. I still think they have a lot of growth opportunity at Alphabet to win new AI workloads. So this game isn’t over. It started out being a Microsoft game, it moved to being more of an AWS game and now we’re about ready to enter what I would consider the Alphabet game for AI right now.
