Alphabet Faces Rising Server Costs Amid Nvidia Chip Price Hikes
Alphabet's technical infrastructure investment saw servers accounting for about 60% of its second-quarter capital budget, according to the company's latest earnings call. This means that servers are the largest single line in Alphabet's budget.
A recent report from Bloomberg suggests that prices on servers built around Nvidia's AI chips are rising more than 15% in many cases. These price increases take effect on systems shipping early next year and affect major data center operators such as Microsoft, Google, and Oracle.
Alphabet expects its capital expenditures to reach $195 billion to $205 billion this year, a range management raised from $180 billion to $190 billion in July. The company's chief financial officer, Anat Ashkenazi, said that about 60% of the second quarter's technical infrastructure investment went to servers, with the remaining 40% going to data centers and networking equipment.