Dan Nils Supports Alphabet and Meta Amid Google Cloud Growth

Dan Nils, founder of Niles Investment Management, expressed support for Alphabet and Meta Platforms, highlighting the significant growth of Google Cloud and Meta's new AI agent. Meanwhile, Nvidia is approaching a valuation of $6 trillion, having set a record high on October 2. On July 22, Alphabet reported that Google Cloud revenue for the second quarter increased by 82% to $24.8 billion. Additionally, revenue from Google Search and other services grew by 17% to $63.3 billion in the same quarter, despite concerns about the impact of artificial intelligence. Nils described this as the fastest acceleration among Google, Microsoft, and Amazon.

Nils also highlighted the recent launch of Meta's AI agent Muse, which took place on September 8. He first mentioned Meta on September 7, when the company's stock had fallen about 7% since the beginning of the year. He noted that this application is currently ranking higher than ChatGPT in the App Store. Nils believes that unlike Google, Microsoft, and Amazon, which already provide AI computing power through public clouds, Meta has the potential to create its own cloud division, which could help it monetize its AI expenses. However, Nils pointed out one gap: Google currently lacks a competing agent, while OpenAI has already launched the Dots agent.

Nevertheless, he reduced his level of support for Meta's stock after the recent rise. JPMorgan raised its price target for Meta shares from $820 to $920. Nils emphasized the need to closely monitor the metrics to ensure there are no issues with Google's search. "You need to watch the numbers and make sure there are no problems with search," he noted. In June, the volume of orders for Alphabet's cloud services, representing customer commitments that have not yet been recognized in revenue, reached $514 billion. This, along with Muse's growth in the App Store, demonstrates whether customers are willing to pay for AI operating on these chips.