AMD Advancing AI, Google Q2 Earnings, OpenAI Plans $750B Cloud Spend | Diet TBPN

**John Coogan** (0:01)
Thank you to the AMD team for having us here at AMD Advancing AI. We're on the road at SF today.
But let's take you through a little bit of the news of what AMD is announcing, what's happening today. Advancing AI is AMD's biggest AI event of the year, where it reveals new chips, software partnerships, and how it plans to compete with NVIDIA, according to Jackson Fordy's TBPN newsletter.

**Jordi Hays** (0:23)
We just found this out this morning. AMD is actually powering the new mod Retro.

**John Coogan** (0:28)
N64.

**Jordi Hays** (0:29)
Very cool.

**John Coogan** (0:30)
It's very, yeah, very crossover.

**Jordi Hays** (0:31)
Palmer, Lisa.

**John Coogan** (0:33)
Yeah, so we're going to be spending all 30 minutes of our time with Lisa Su on gaming, specifically.

**Jordi Hays** (0:38)
Exactly. How are they going to bring? And suits.

**John Coogan** (0:40)
And suits, yes. And suits.
So the three key stories that people are focused on out of AMD advancing AI are AMD unveils Helios, the new rack scale AI system powered by the MI450 accelerator. We'll talk to Lisa about that. Also, a new partnership with the Frontier Lab, AMD and Anthropic are partnering to deploy up to 2GW of AMD Instinct MI450s.

**Jordi Hays** (1:05)
Size gong moment.

**John Coogan** (1:06)
Size gong $5 billion deal and a whole bunch of collaboration across compute and the software stack. The big question around the software ecosystem around AMD is always a hot topic. I'm sure there's a ton of developments there.

**Jordi Hays** (1:20)
On stage, just a little bit ago, they were talking about how Anthropic's own models are effectively speeding up their ability to ramp up new hardware, which is something that has been talked about for years now. Some questions around the kuda mode. If you assume that making great software will just get easier and easier, that's been a big question and they're starting to see real movement.

**John Coogan** (1:46)
Yeah, but also a lot of that speed up requires actual deep partnership like this because there are some close source packages that you might need to work on. This is the old George Hott's interaction, talking about little bugs that he was frustrated with, wound up working with AMD developer team, who we've talked to on the team on the show, fantastic outcome there, but interesting to see that flywheel just get tighter and tighter and tighter. And I expect it will. Also AMD is expanding its partnership with Cerebris, teaming up on AI Inference.
We love the team over at Cerebris.
They introduced a powerful disaggregated inference solution, pairing the right engine to each phase of the inference pipeline. This is what agentic AI has been waiting for, the fastest production inference at massive scale. Google has the muscle to overpower spending worries, says the Wall Street Journal. Google has put up some very impressive cloud growth numbers. There of course was some back and forth on the nature of that revenue, with SemiAnalysis sort of jokingly maybe posting, Google Cloud generates revenue primarily from the sale of TPU systems. The actual line that did change in the SEC filing that's drawing attention is that there's a line in there that says Google Cloud generates product revenues primarily from the sale of TPU systems, which is a little confusing because you think of a company's product as their business. Of course, they have services as well. And so it's not that Google Cloud is fully pivoting to TPU sales exclusively. It is that they are also...

**Jordi Hays** (3:22)
But it's becoming meaningful.

**John Coogan** (3:23)
Yes. Yes. Yes. They've sold them to a number of labs and they're seeing lots of process.

**Jordi Hays** (3:28)
Rewind a year, though, is still a question.

**John Coogan** (3:30)
Yes. Yes. We can go through...
There's a number of different posts here. We can take you through Eric Sufert talking back and forth about...

**Jordi Hays** (3:43)
Sufenator?

**John Coogan** (3:43)
The Sufenator's putting a little bit of truth zone on Google Ads growth, what's going on there. They saw a lot of growth in monetized LLM queries. It all started with Sundar Pichai's news. He said, Q2 was an amazing quarter with our AI investments redefining what's possible across every part of our business. Alphabet revenue grew 24% year over year, Google Cloud accelerated to 82% growth, which is insane. That is the foghorn for sure.
We saw an exciting momentum across the board from search to YouTube to the Gemini app. Our model APIs are processing 22 billion tokens a minute. At this point, the numbers have gotten so big on tokens per minute, tokens per month, that it's very hard to keep in sync with what's actually impressive until you actually see a full chart. But that's driven by their workhorse Flash model, which makes sense, they've been focused on very efficient token generation because they vend them into so many Google systems for effectively free because they're still monetizing via advertising. So Max Anderson said, as someone who has personally spent $500,000 a month plus on Google ads for years, I can tell you with certainty, this revenue growth in search is artificial and extremely unhealthy for Google's business long term. A little bit of fear, uncertainty, doubt. Search volumes are declining as legacy searches are being increasingly cannibalized by non-monetized LLM queries. Google's response, manufacture revenue growth via short-sighted, highly extractive customer hostile tactics, i.e. charge advertisers more for lower quality clicks, including clicks they do not want and explicitly do not approve Google to charge them for. He gives a few examples. He's going back and forth saying that this is short-term optimization. But the suvenator comes in and he says, unfortunately, every claim made in this viral thread is either or mixed, characterizes Google's policy. One, search volumes are declining as legacy search is being increasingly cannibalized by non-monetized LLM queries. Google stated in its Q2 earnings that search usage hit an all-time high during the World Cup this year. It also stated in Q1 earnings that search queries reached an all-time high that quarter. Ads and AI overviews monetized in parity with those in the legacy search, and Google's search revenue increased by 19% in Q1 and 17% in Q2. So a little deceleration, but still growing. He also debunks the idea that Google silently deprecated the second price auction. Google still uses generalized second price auction for search. He also debunks the idea that Google previously had precise keyword targeting settings that allowed advertisers to pick individual search phrases to bid on. There's a different thing. But Sufanator goes back and forth and adds some more context to the Google earnings that people are digging into. And we can dig into more later this week. Over in the Wall Street Journal, there's a couple articles.