chris

Cloud margins increasing, backlog increasing. Capex -> revenue. What fucking bubble? It's just getting started.

$AMZN, $MSFT, and $GOOGL will raise prices in this compute shortage. Investors are expecting lower margins than in the pre-AI era. What might end up happening for the next few years, at least, is actually the reverse, and margins go higher as a result of the shortage.

JUST IN: GOOGLE $GOOGL JUST REPORTED Q2 EARNINGS: CLOUD GREW 82% AND NET INCOME TRIPLED, WITH A $98B ASTERISK The quarter: - Revenue: $119.8B, +24%, vs roughly $120.4B expected 🔴 - EPS: $9.11, up 294%, but a $98B unrealized gain on equity investments added $6.26 of that, per the release's own footnote. Strip it out and EPS lands near $2.85 - Operating income: $40.8B, +30%, margin up 2 points to 34% The AI monetization case: - Google Cloud: $24.8B, +82%, a sharp acceleration - Cloud operating income: $8.8B vs $2.8B a year ago, margin up from about 21% to about 36% - Search & other: $63.3B, +17%. YouTube ads: $11.1B, +13% - Gemini: 22B API tokens per minute, 950M monthly app users, nearly 90% of the Fortune 100 on Gemini Enterprise The bill for it: - Capex: $44.9B this quarter, double a year ago - Free cash flow: negative $5.9B for the quarter - Buybacks: zero. Google instead raised $49.6B in a June stock sale, citing AI infrastructure and global compute among the uses, set up a $40B at-the-market program, and issued $20.3B of senior notes Cloud margins say the AI spend is monetizing. The financing says the spend is only getting bigger.

Kimi K3 has received far more love than we expected, and our GPUs are feeling it. Over the past 48 hours, demand has pushed close to the limits of our current capacity. To protect the experience of existing subscribers, we're temporarily pausing new subscriptions and prioritizing compute for current members. Existing subscribed users are not affected. We're adding capacity as fast as we can and will reopen new subscription spots in batches. Going forward, we'll also split membership into two more focused plans: Kimi Membership for Kimi Web, App, and Work; and Kimi Code Membership for coding workflows. This will help us match compute more precisely and keep the experience stable. Thank you for your patience and understanding!