Amazon, Google could see combined $50B in revenue from renting out GPUs
Oct. 23, 2023 11:04 AM ET
By: Chris Ciaccia, SA News Editor
2 1 Comments
 Noah Berger
Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOG) (NASDAQ: GOOGL) are two of the biggest cloud platforms by revenue, but investment firm Morgan Stanley thinks the two could significantly boost sales by renting out access to hard-to-get GPUs.
Morgan Stanley analysts led by Brian Nowak, wrote that the potential market for GPU infrastructure-as-a-service, or IaaS, market could be $44B by 2025 and $60B or more by 2026. With Amazon still the dominant player in the IaaS market, the analysts think the Andy Jassy-led company could generate $30B in revenue and perhaps as much as $20B in gross profit.
At $20B, it would be roughly 21% of Amazon Web Service's current gross profit estimates and roughly 5% of Amazon's total gross profit estimate in 2026.
"This, in our view, again speaks to the further growth runway (for more durable multi year growth) that generative AI is creating," the analysts explained.
For Google ( GOOG) ( GOOGL), the analysts see the opportunity at $20B in revenue and roughly $13B in gross profit from doing the same, despite being a "distant" third in IaaS, behind Amazon and Microsoft ( MSFT).
"It could also help GOOGL's multiple given the material potential GCP upside," the analysts wrote.
The analysts based their estimates on the continued rollout of Nvidia's ( NVDA) A100, H100 and B100 chipsets, which are currently supply constrained.
Amazon ( AMZN) and Google ( GOOG) ( GOOGL) were both up around 0.5% in early Monday trading. |
