Comment by JonathanBeuys
6 days ago
I have not looked into Meta, but when I look at the growth of Alphabet's cloud revenue, it looks pretty solid:
https://x.com/JonathanBeuys/status/1984882268817519036
That is revenue from real world usage of their datacenters. Usage their customers would not pay for if it did not have a positive ROI.
A pretty stable growth of 30% per year for the last 5 years. At a current level of about $50B per year.
What is the value of it, if it continues like this for another decade? Revenue would be at roughly $1T/year then.
In the face of this real usage and the growth of it, spending tens of billions of dollars on building out infrastructure looks ok to me.
That's literally just a line go up graph with no details whatsoever? Also, "According to Perplexity" why is it not "according to Alphabet"?
Which additional details would you like to see?
According to Perplexity because instead of going through 20 earnings reports myself, I outsourced the task to Perplexity and then manually checked a few of the numbers to be reasonably sure they were correct.
Oh, gotcha. I thought it was Perplexity themselves reporting about Google's earnings or something.
Like how much of it is actually the "AI" part of the business for a start?
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> What is the value of it, if it continues like this for another decade? Revenue would be at roughly $1T/year then.
That's a big "if", usually things don't grow at 30% per year for 15 years.
Do I understand your logic correctly that after 14 years of 30% growth another year is extremely unlikely and after 14.99 years it is almost impossible?
My logic is that we only have to take the next 10 years into account when calculating the probability.
And lots of things grew 30% or more for 10 years.
Bitcoin's market cap grew over 70% pa for 10 over years now.
Amazon's revenue grew over 60% pa for over 10 years in their early days.
I can think of many numbers, but would have to check: global solar installations, smartphone usage are examples that come to mind.
My logic is that past results don't indicate future results, and assuming that the growth rate from the last 5 years will stay the same for the next 10 years is a big "if". For new companies, new products, high growth rates over many years are normal, but we're talking about an established market that has already seen big growth rates over a long time (as the other commenter pointed out). Smartphone sales today are the same as in 2015, because there's an obvious ceiling to growth in that market, and it has been reached a long time ago. Number/power of solar installations is also a very different thing than revenue, because the growth in that market is caused by the rapidly falling prices (~10x in the last 15 years), so the installed power grows much faster than the cumulative cost of that power. As the computing power is still getting cheaper, and cloud usage is already high, with many competitors, I'd expect the revenue growth to slow down in the next 10 years.
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Cloud spend overall has - CAGR of 30-35% from 2007 to 2025.
> Usage their customers would not pay for if it did not have a positive ROI.
I don't think we can assume that's true. Their customers are paying for it, but we don't know how profitable they are being with the AI compute they pay for.