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AI Ace: Alphabet's 3 Key Strengths Fuel Growth
23 Feb
Summary
- Alphabet possesses data, distribution, and computing capacity for AI success.
- Compute capacity to reach 35 gigawatts by 2028, widening competitive advantage.
- Gemini revenue projected to triple by the end of 2027.
Alphabet is poised for continued success, according to Wells Fargo, which has identified three critical traits positioning the company as an AI leader. Analyst Ken Gawrelski upgraded Alphabet's rating to overweight, signaling a strong belief in its future performance. The upgrade highlights Alphabet's robust data assets, extensive distribution networks, and substantial computing capacity.
These strengths are crucial for both internal AI development, including Gemini, and external monetization through its Google Cloud Platform. Alphabet is aggressively expanding its AI compute capacity, targeting 35 gigawatts by 2028, a significant increase from its current 15 gigawatts. This expansion is expected to provide a distinct competitive advantage in the evolving AI landscape.
Furthermore, the monetization of Gemini is anticipated to be a significant growth driver. Projections indicate that Gemini's average recurring revenue could triple to $12 billion by the end of 2027. This optimistic outlook aligns with the broader Wall Street sentiment, with a majority of analysts maintaining buy or strong buy ratings for Alphabet.
