Alphabet and Meta stocks rose following Meta's reported cloud deal with Google and Federal Reserve signals about a possible September rate cut. Meta agreed to pay Google $10 billion over six years for Google Cloud storage, server, networking, and related products. Meta previously used AWS and Azure and may continue those relationships while increasing Google Cloud usage. The arrangement reflects Meta's large and growing demand for cloud infrastructure as it pursues AI capabilities. The partnership stands out because Meta and Alphabet are major digital-ad competitors, and it could act as a catalyst for Alphabet while highlighting its valuation.
The stocks of Google parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Meta Platforms (NASDAQ: META) shot higher in Friday trading. Although most stocks rose because the Federal Reserve strongly hinted at a September cut in interest rates, another factor was likely the announcement of Meta's cloud deal with Google, as reported by The Information. Considering the $10 billion size of the deal, one has to assume it is critical, particularly to Alphabet.
Under the terms of the deal, Meta will pay Google $10 billion over six years. In exchange, it will receive access to Google Cloud's storage, server, and networking services, along with other products. Meta has previously relied on Amazon's Amazon Web Services (AWS) and Microsoft's Azure for such services. The deal does not necessarily mean it will deal less with these companies. More likely, it speaks to Meta's insatiable demand for cloud infrastructure as it seeks to become a major player in the AI space.
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