APAC Technology_UBS Tech Views_ Implications from Google's capex and AMD's outlook

Investment Rating - Alphabet Inc. (Google) has a Neutral rating with a stock price of US$192.80 as of February 4, 2025 [24] - Advanced Micro Devices Inc. (AMD) has a Buy rating with a stock price of US$119.50 as of February 4, 2025 [24] Core Insights - Google's Q424 revenue grew 12% YoY to US$96.5 billion, slightly below the expected US$96.7 billion, with Google Cloud revenue growth decelerating from +35% YoY to +30% YoY due to supply constraints [3][4] - Google's capital expenditures (capex) for Q424 were US$14.3 billion, a 30$52.5 billion, up 63% YoY [3][4] - AMD's Q424 revenue increased 12% QoQ and 24% YoY to US$7.7 billion, driven by strong performance in server and PC CPUs, while guidance for Q125 sales is US$7.1 billion, reflecting a 30% YoY increase [6][7] Summary by Sections Google - Q424 results were impacted by cloud constraints, with Google Cloud revenue at US$12.0 billion, 2 points below expectations [3] - AI initiatives include significant increases in compute capacity and strong uptake of TPU v6 on 5nm technology [3] - Capex guidance for Q125 is set between US$16-18 billion, with a full-year 2025 capex expected to exceed US$75 billion, a 43$3.9 billion, a 69% YoY increase [6][7] - Guidance for Q125 indicates a seasonal decline but still shows a healthy YoY growth outlook [6][7] - AMD's inventory increased by 7% QoQ to US$5.7 billion, with a reduction in inventory days from 155 to 149 [7] Hardware Supply Chain - Google's capex outlook supports strong AI server growth for hardware suppliers in Taiwan, with significant contributions from companies like Celestica and Quanta [4] - AMD's reliance on TSMC for its manufacturing needs remains strong, with expectations for continued growth in its GPU product lines [7]