Dan Niles Backs Alphabet (GOOGL) on 82% Google Cloud Growth

Google Cloud Drives the Bull Case

Dan Niles, founder of Niles Investment Management, said he still likes Alphabet and Meta Platforms, and he built the case around Google Cloud. Alphabet disclosed on July 22, in its second-quarter filing with the SEC, that Google Cloud revenue rose 82% to $24.8 billion, and Niles called that the fastest acceleration among Google, Microsoft and Amazon. Search and other revenue rose 17% to $63.3 billion in the same quarter, and Niles told investors to keep testing that line, because fears persist that AI answers will erode search demand. “You got to watch the numbers and make sure there’s not some issue with search,” he said in a recent interview.

The conviction rests on where the money goes next. Google, Microsoft and Amazon already rent out AI computing capacity through their public clouds, which turns data-center spending into recurring revenue. Alphabet’s cumulative cloud commitments, the signed customer obligations not yet booked as revenue, reached $514 billion as of June, a contracted backlog that gives the company a long demand runway. Niles sees one gap in the story: Google has no competing agent of its own yet, while OpenAI has launched its Dots agent. An agent that sends queries and completes tasks on a user’s behalf could change where search demand flows, which is why he wants the search data checked each quarter rather than assumed.

Meta’s Muse and the Cloud Gap

Meta Platforms launched Muse, an agent that browses the web and completes tasks for users, on September 8, and Niles said the app now ranks above ChatGPT on the App Store. He first flagged Meta on September 7, when the stock was down about 7% year to date, and the launch is the reason he stayed with the call. The ranking matters because it shows consumer demand for AI agents is real, and it underpins his monetization argument: unlike Google, Microsoft and Amazon, Meta does not rent out AI computing power through a public cloud. Niles sees building a cloud arm as Meta’s next way to earn a return on the AI spending it is already making, turning an internal cost center into a revenue line. Every agent session consumes compute, so a widely used consumer agent gives Meta internal demand for its own infrastructure before it ever sells capacity externally. What Meta has not disclosed is any timeline, pricing or terms for such a service.

His enthusiasm on valuation has cooled. Niles said he likes the stock less than in September after the run-up, though he still sees momentum. JPMorgan lifted its Meta price target to $920 from $820 last month, a move that mirrors the same agent-to-cloud thesis. The valuation backdrop is the AI chip market itself: NVIDIA set a record high on October 2 as it approaches a $6 trillion market cap, proof of what investors will pay for AI infrastructure, and Niles argues the harder question is who earns a return on the spending behind those chips.

$351 Resistance in Focus

COINOTAG data shows Alphabet (GOOGL) trading at $347.90, up 1.11% over the past 24 hours, inside a daily range of $342.46 to $348.26. The strongest support sits at $343.91, which COINOTAG’s composite scoring rates at 100/100, where the 20-day EMA, the 50-day EMA and the S1 pivot converge. Overhead, resistance at $351.00 scores 91/100, formed by the R2 pivot and the top of the Ichimoku Cloud. Momentum backs the news-driven bid: the daily RSI reads 54.0, the MACD signal is bullish and the trend remains an uptrend. In perpetual positioning, the funding rate stands at 0.0079% with open interest near $106.4 million. A daily close above $351.00 would confirm the cloud-growth thesis behind Niles’s call, while losing $343.91 would invalidate it.