Gene Munster of Deepwater Asset Management projects that Alphabet's Google Cloud and Amazon's AWS will exceed consensus revenue estimates for the quarter ending June, driven by strong demand for AI infrastructure. Google Cloud revenue is expected to jump 70% year over year in June, above the consensus estimate of 64%, while AWS is forecast to grow 34% in the June quarter, up from 32% expected. Munster and co-author Brian Baker stated that improved AI infrastructure earnings growth is expected to offset valuation compression, though tech firms face investor scrutiny as beating estimates alone may no longer suffice to justify elevated capital expenditure plans.
Munster Projects Google Cloud and AWS to Exceed Q2 Revenue Estimates
Munster forecasts that Google Cloud will outperform competitors in the June cloud results, driven by aggressive infrastructure buildout and effective customer acquisition through its family of models. This strategy is projected to push Google Cloud's year-over-year revenue growth to 70%, outperforming the Street's 64% projection.
AWS is expected to extend its outperformance streak as demand consistently outruns supply despite ongoing expansion efforts. This dynamic is forecast to yield a 34% year-over-year growth rate, beating the street consensus of 32%.
Microsoft is anticipated to see the smallest upside among the top three cloud providers, with its year-over-year growth projected to land exactly in line with expectations at 40%.
Deepwater Forecasts 2027 Hyperscaler Capex Growth at 37%
Munster projects that consensus calendar year 2027 hyperscaler capex growth estimates will increase from the current 23% year-on-year to 37%. He stated that if the bulk of recent funding expansions by market leaders shifts into next year's deployments, aggregate hyperscaler capex growth could surge to 37% year-over-year.
Meta is anticipated to modestly boost its 2027 capex outlook to 25%, up from initial expectations of 21%.
Consensus Wall Street expectations currently peg calendar year 2027 hyperscaler capex growth at 23% year-over-year, according to Munster and Baker's note.
GOOGL and AMZN Stocks Show Divergent Year-to-Date Performance
GOOGL stock gained 15% year-to-date, while AMZN rose 6% in the same period. Retail sentiment on Stocktwits was 'neutral' for GOOGL stock and 'bearish' for AMZN, with 'normal' message volumes.
FAQ
What did Gene Munster project for Google Cloud and AWS revenue in the June quarter?
Gene Munster of Deepwater Asset Management projected that Google Cloud revenue will jump 70% year over year in June, above the consensus estimate of 64%, and that AWS will grow 34% in the June quarter, up from 32% expected.
What is Munster's forecast for 2027 hyperscaler capex growth?
Munster forecasts that consensus calendar year 2027 hyperscaler capex growth estimates will increase from the current 23% year-on-year to 37%, driven by recent funding expansions shifting into next year's deployments.
How have GOOGL and AMZN stocks performed year-to-date?
GOOGL stock gained 15% year-to-date, while AMZN rose 6% in the same period, with retail sentiment on Stocktwits recorded as 'neutral' for GOOGL and 'bearish' for AMZN.
