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I don’t think it matters that much for Google. They need to not fall hopelessly behind, but I don’t think there’s a strong economic reason for Google to burn th

by peterlk 2mo ago

I don’t think it matters that much for Google. They need to not fall hopelessly behind, but I don’t think there’s a strong economic reason for Google to burn the kind of capex that the frontier labs are burning. Strategically, I think they’re probably doing better than OpenAI and Anthropic. The Gemini models are open, and they are what researchers are working with (see neuronpedia as an example). Over time, this will give them a strategic advantage for the same reasons that open source wins over proprietary. Meanwhile, OpenAI and Anthropic have massive capex that needs to be returned to investors while their margins are being undercut by Kimi/Deepseek/Qwen. Google can wait around for the coming frontier lab profitability crisis and cruise right on by with their Apple contract and owned data centers to pick up the pieces and exceed the existing frontier labs.

tokioyoyo 2mo ago
"The company raised its full-year 2026 capex forecast to between $195 billion and $205 billion, with further significant increases planned for 2027." - Alphabet.
- WarmWash 2mo ago
  This is against a $500B+ backlog of demand, which is mostly from OAI and Anthropic.
- asdfman123 2mo ago
  I think ~$200B is just for AI infrastructure capex. Fun fact: that's nearly what the 3rd largest military in the world (Russia) is spending on a land war in Europe.
keeda 2mo ago
Google, of all companies, much vaunted (as in your comment!) for its huge infrastructure footprint, is renting compute from SpaceX to the tune of almost a billion a month: https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/ https://techcrunch.com/2026/06/05/google-will-pay-spacex-920... This is in addition to bumping their CapEx spend to the extent their cash flow turned negative for the first time ever this quarter: https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... The world doesn’t realize how desperately compute-crunched hyperscalers are to meet AI demand. This is a better problem to have than SpaceX, which is renting out capacity obviously because it’s own AI products aren’t selling.
- haldujai 2mo ago
  A deal with a company Google has a share of, announced a week before their IPO, with very non-committal terms and ramp period protections delivered in one large block on short term notice priced likely at the high end of what Google charges for A4X instances anyway. I don’t think this reflects desperation as much as strategy.
  - keeda 2mo ago
    I dunno if it's a sound strategy that involves repeatedly telling investors [1] and employees [2] over multiple quarters that you are desperate for compute, including leaving a triple-digit billion backlog on the table [3], and then spending so much on CapEx that you have your first negative cash flow quarter ever and taking the inevitable hit to the stock [4], while turning away a large paying customer (who also happen to be a competitor) [5] ;-) [1] https://www.mindstudio.ai/blog/sundar-pichai-google-compute-constrained-enterprise-ai https://www.mindstudio.ai/blog/sundar-pichai-google-compute-... [2] https://www.cnbc.com/2025/11/21/google-must-double-ai-serving-capacity-every-6-months-to-meet-demand.html https://www.cnbc.com/2025/11/21/google-must-double-ai-servin... [3] https://www.bloomberg.com/news/articles/2026-07-22/google-says-cloud-services-backlog-expands-to-514-billion https://www.bloomberg.com/news/articles/2026-07-22/google-sa... [4] https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... [5] https://thenextweb.com/news/google-caps-meta-gemini-compute-shortage https://thenextweb.com/news/google-caps-meta-gemini-compute-...
    - haldujai 2mo ago
      Backlog meaning RPO over 5 years. It’s not as if they would be able to collect 250B today from OpenAI and Anthropic if they were to have that compute. In any case, my point is that the SpaceX deal specifically likely has ulterior motives.
      - keeda 2mo ago
        The RPO can be anywhere from 3 - 6 years, sure, but even on an annual basis that’s like a hundred billion now. It was already in the double-digit billions since before AI took off and has only been spiking since then, which tells us 1) it’s been huge for 3+ years, and 2) it’s still growing faster than they can collect it. This matches what all the other hyperscalers are doing. My point is that an ulterior motive is not necessary to assume when all their actions and statements point to them being severely crunched for compute. I mean sure, if they had a choice between say, CoreWeave and SpaceX, they’d choose the latter for the nice bump to SpaceX’s financials and their stake… but not just for that, not when it contributes to their cash flow turning negative and their own stock taking a hit.
lgessler 2mo ago
I'm confused. I think you're confusing Gemini and Gemma. Gemini is Google's frontier offering which is closed-weight, API-only, like most frontier models. Gemma is Google's open-weight offering focused on deployment on consumer and edge hardware.

by peterlk 2mo ago

tokioyoyo 2mo ago

"The company raised its full-year 2026 capex forecast to between $195 billion and $205 billion, with further significant increases planned for 2027." - Alphabet.

WarmWash 2mo ago
This is against a $500B+ backlog of demand, which is mostly from OAI and Anthropic.
asdfman123 2mo ago
I think ~$200B is just for AI infrastructure capex. Fun fact: that's nearly what the 3rd largest military in the world (Russia) is spending on a land war in Europe.

keeda 2mo ago

Google, of all companies, much vaunted (as in your comment!) for its huge infrastructure footprint, is renting compute from SpaceX to the tune of almost a billion a month: https://techcrunch.com/2026/06/05/google-will-pay-spacex-920m-per-month-for-compute/ https://techcrunch.com/2026/06/05/google-will-pay-spacex-920... This is in addition to bumping their CapEx spend to the extent their cash flow turned negative for the first time ever this quarter: https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... The world doesn’t realize how desperately compute-crunched hyperscalers are to meet AI demand. This is a better problem to have than SpaceX, which is renting out capacity obviously because it’s own AI products aren’t selling.

haldujai 2mo ago
A deal with a company Google has a share of, announced a week before their IPO, with very non-committal terms and ramp period protections delivered in one large block on short term notice priced likely at the high end of what Google charges for A4X instances anyway. I don’t think this reflects desperation as much as strategy.
- keeda 2mo ago
  I dunno if it's a sound strategy that involves repeatedly telling investors [1] and employees [2] over multiple quarters that you are desperate for compute, including leaving a triple-digit billion backlog on the table [3], and then spending so much on CapEx that you have your first negative cash flow quarter ever and taking the inevitable hit to the stock [4], while turning away a large paying customer (who also happen to be a competitor) [5] ;-) [1] https://www.mindstudio.ai/blog/sundar-pichai-google-compute-constrained-enterprise-ai https://www.mindstudio.ai/blog/sundar-pichai-google-compute-... [2] https://www.cnbc.com/2025/11/21/google-must-double-ai-serving-capacity-every-6-months-to-meet-demand.html https://www.cnbc.com/2025/11/21/google-must-double-ai-servin... [3] https://www.bloomberg.com/news/articles/2026-07-22/google-says-cloud-services-backlog-expands-to-514-billion https://www.bloomberg.com/news/articles/2026-07-22/google-sa... [4] https://arstechnica.com/google/2026/07/google-just-had-its-first-negative-cash-flow-quarter-ever-due-to-massive-ai-spending/ https://arstechnica.com/google/2026/07/google-just-had-its-f... [5] https://thenextweb.com/news/google-caps-meta-gemini-compute-shortage https://thenextweb.com/news/google-caps-meta-gemini-compute-...
  - haldujai 2mo ago
    Backlog meaning RPO over 5 years. It’s not as if they would be able to collect 250B today from OpenAI and Anthropic if they were to have that compute. In any case, my point is that the SpaceX deal specifically likely has ulterior motives.
    - keeda 2mo ago
      The RPO can be anywhere from 3 - 6 years, sure, but even on an annual basis that’s like a hundred billion now. It was already in the double-digit billions since before AI took off and has only been spiking since then, which tells us 1) it’s been huge for 3+ years, and 2) it’s still growing faster than they can collect it. This matches what all the other hyperscalers are doing. My point is that an ulterior motive is not necessary to assume when all their actions and statements point to them being severely crunched for compute. I mean sure, if they had a choice between say, CoreWeave and SpaceX, they’d choose the latter for the nice bump to SpaceX’s financials and their stake… but not just for that, not when it contributes to their cash flow turning negative and their own stock taking a hit.

lgessler 2mo ago

I'm confused. I think you're confusing Gemini and Gemma. Gemini is Google's frontier offering which is closed-weight, API-only, like most frontier models. Gemma is Google's open-weight offering focused on deployment on consumer and edge hardware.