Alphabet (GOOGL) Boosts Google Cloud With H100-Powered A3 VMs
Alphabet’s GOOGL Google is making efforts to strengthen its cloud segment on the back of innovative products.
This is evident from its latest move of making its much-awaited A3 virtual machines (VM) generally available from this month.
A3, which was launched last year, is powered by NVIDIA’s NVDA H100 Tensor Core GPUs that feature a transformer engine capable of addressing trillion-parameter models.
A3 VMs are comprised of dual next-generation 4th Gen Intel Xeon scalable processors, eight NVIDIA H100 GPUs per VM and 2TB host memory.
It delivers 3.6 TB per second of bisectional bandwidth, which, in turn, enhances the supercomputing powers of the users.
More precisely, A3 VMs are designed to cater well to the growing demand for generative AI workloads and large language models.
We note that Google’s partnership with NVIDIA for A3 VMs is likely to bolster its supercomputing capabilities.
Google is well-poised to gain strong momentum among AI innovators and enterprises building advanced AI models.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Strengthening Google Cloud Offerings
The latest move has bolstered Google Cloud offerings.
Along with the general availability of A3 VMs, the company strengthened its Kubernetes offerings by launching an enterprise version of its Google Kubernetes Engine (“GKE”) at a Google Cloud Next event.
GKE Enterprise aids enterprises in complex workload management while running multiple clusters by combining GKE with Anthos, Google’s container platform. It is designed to address complicated Kubernetes environments as it features security and governance tools and service mesh management.
Google also announced the general availability of its generative AI-backed helper, Duet AI, for Gmail, Drive, Docs and more.
Any organization using Google Workspace will be able to benefit from this AI helper, which boasts several new capabilities. It acts as a meeting assistant for Google Chat, a document summarizer and also allows personalization for Gmail's smart replies.
We believe strengthening the Google Cloud segment remains a major Alphabet. Google Cloud has become an integral part of Alphabet, which generated revenues of $8.03 billion in the second quarter of 2023. The figure accounted for 10.8% of the quarter’s total revenues and exhibited year-over-year growth of 28%.
Our model projects Google Cloud’s 2023 revenues to be $31.44 billion, indicating year-over-year growth of 19.6%.
We believe that strengthening the Google Cloud is likely to aid Alphabet’s overall financial performance. This, in turn, is expected to instill investor optimism in the stock.
Our model projects Alphabet’s total 2023 revenues at $300.45 billion, indicating year-over-year growth of 6.2%.
GOOGL has returned 54% on a year-to-date basis, outperforming the Computer and Technology sector’s growth of 41%.
Zacks Rank & Stocks to Consider
Alphabet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Applied Materials AMAT and Salesforce CRM. Applied Materials sports a Zacks Rank #1 (Strong Buy), and Salesforce carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials shares have gained 54% in the year-to-date period. AMAT’s long-term earnings growth rate is currently projected at 6.10%.
Salesforce shares have gained 59.9% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 19.25%.
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