JPMorgan: 82% Cloud Business Growth Proves AI Spending Pays Off, Buy the Dip

TechFlow News, July 24, according to TechFlow Research, Google's Q2 earnings confirm AI monetization is accelerating. Cloud revenue grew 82% YoY to $24.77 billion, accelerating consecutively; TPU contributed over $1 billion in revenue separately for the first time, order backlog increased $52 billion QoQ to $514 billion, indicating AI computing demand is far from saturated. Search business grew 17% YoY, AI model MAU exceeded 1 billion.

2026 capital expenditure raised to $195-205 billion, JPMorgan believes this reflects computing power supply shortage rather than cost pressure, and it will continue to grow in 2027. Maintains Overweight rating, price target $420, approximately 34% upside compared to current stock price. Profit margin pressure stems from transitional factors such as third-party capacity bridging and TPU hardware sales, not structural deterioration. JPMorgan believes AI investments have begun to yield returns, recommends buying on dips.