Editor's note: Google Cloud's 2027 growth forecast was raised from 70% to 107%; AWS's growth forecast for the same period was raised to 40%. Ahead of third-quarter earnings releases, JPMorgan gave more positive assessments of both cloud businesses.
The factors supporting these revisions are quite specific: more TPU sales were included in Google Cloud's model, while AWS benefits from expanded AI partnerships, additional GPU deployments, and higher prices for reserved compute. For cloud providers, the basis for judging AI demand is increasingly shifting to revenue structure, delivery capacity, and pricing levels.
But upward revisions to growth expectations do not mean investment returns have been fully validated. In the same report, Meta saw its earnings forecast cut due to legal expenses and higher spending expectations, while Fiverr continues to bear the impact of AI on traffic gateways and low-value services. The divergence in AI investment is already showing up in different parts of revenue, profit, and cash flow.
The following is a translation of the original text:
Google Cloud growth forecast doubles, with key incremental contribution from TPU sales
Ahead of third-quarter earnings releases, JPMorgan significantly raised its Google Cloud growth forecast, with the core incremental contribution coming from sales of its self-developed AI chip, TPU.
The bank raised its forecast for Google Cloud's year-over-year revenue growth in the third quarter of 2026 from 88% to 100%, and for the fourth quarter from 90% to 105%. The more notable adjustment occurred in 2027: the full-year growth forecast was raised from 70% to 107%, and for 2028 from 55% to 63%. These figures are institutional forecasts, not yet company-reported results.
JPMorgan said the main reason for the upward revision was the inclusion of more Tensor Processing Unit (TPU) sales in its model, and it believes the adjusted forecast may still prove conservative. TPUs are specialized chips designed by Google for machine learning computing, and their sales growth is becoming an important variable in the bank's assessment of Google Cloud revenue.
This also means that understanding Google Cloud's growth requires further observation of its revenue composition. The 107% growth forecast includes a greater contribution from TPU sales and cannot be entirely attributed to an acceleration in traditional cloud service consumption. The margin profiles, delivery cadence, and cash collection characteristics of different businesses will also affect how much of the revenue growth can ultimately translate into profit.
At the group level, JPMorgan raised its 2027 U.S. GAAP earnings per share (EPS) forecast for Alphabet by about 3% to $14.05, and its 2028 forecast by about 4% to $17.29; it increased its December 2027 price target from $420 to $425, maintaining an "Overweight" rating, corresponding to approximately 25 times 2028 estimated earnings per share.
While the cloud business growth expectation was raised substantially, the upward revision to group earnings forecasts was relatively modest. How much earnings elasticity a single business's growth can generate still depends on its revenue scale, cost structure, and the performance of other group businesses.
Financing was also incorporated into this adjustment. JPMorgan included in its model the $5 billion debt financing that Waymo completed in early October as stated in the report, and assumed $80 billion in new debt financing in 2027. The latter is a forecast assumption and cannot be regarded as announced or completed financing.
AWS Growth Logic Extends to Price Increases, New Compute Capacity Still Needs to Materialize
For Amazon, JPMorgan expects AWS revenue to accelerate to 40% growth in 2027, and believes this forecast may still prove conservative.
Its judgment is supported by two main factors: first, the expanded scale of cooperation with OpenAI and the additional deployment of 2 million GPUs in 2027-2028; second, the pricing power of AI compute. New compute capacity determines the potential delivery scale, while price affects the revenue that can be realized from the same resources.
According to the report, AWS raised prices for GPU reserved compute capacity by 15% starting October 7, marking the fourth consecutive quarter of price increases for related AI reserved compute capacity. The report also noted that prices related to H100/H200 and B200/B300 have cumulatively risen 40% to 75% since the beginning of the year.
Reserved compute capacity refers to service arrangements in which customers book a certain amount of computing capacity in advance. The price increases in the report are concentrated on specific GPUs and reserved AI compute capacity, and cannot be used to conclude that all AWS products are raising prices by the same magnitude.
JPMorgan also emphasized that client demand has a certain breadth: AWS's compute allocation is relatively dispersed, with its largest customer accounting for only a single-digit percentage. Its growth thesis therefore includes both the incremental contribution from large AI partnerships and demand support from a broader customer base.
These factors together drove the bank to raise its Amazon forecasts for 2027 and 2028: group sales increased by about 1% to 2%, operating income increased by about 3% to 5%, and GAAP earnings per share increased by about 2% to 3%. JPMorgan maintained its December 2027 price target of $365 and its "Overweight" rating, based on a valuation of about 27.5 times 2028 estimated earnings per share of $13.34.
The upward revisions to revenue and earnings support its positive stance, but AWS still needs to translate partnership expansion and deployment plans into actual delivery. The report also listed as risks the early stage and limited visibility of generative AI monetization, as well as the potential impact of continued investment on margins. Price increases provide revenue support, but their ultimate profit contribution still depends on equipment, operating, and delivery costs.
Meta revenue edges up, while expense and cash flow pressures are more prominent
Compared with the upward forecast revisions for the two cloud businesses, Meta's adjustment this time mainly reflects higher expenses.
JPMorgan added $10 billion in legal expense accruals to its third-quarter 2026 model. The report attributed this to Meta's settlement with 52 state attorneys general and noted that this expense was not included in the company's full-year expense guidance of $165 billion to $169 billion given in its second-quarter earnings report.
As a result, the bank lowered its Meta 2026 GAAP earnings per share forecast by about 10% and its 2027 forecast by about 2%, to $27.99 and $31.08, respectively.
At the same time, JPMorgan raised its 2027 GAAP total expense forecast to about $210 billion, up about 18% year over year; excluding the aforementioned $10 billion in legal expenses from the 2026 base, the 2027 expense increase would be about 25%. The lower headline growth rate is partly due to the prior-year one-time expense raising the base.
On the revenue side, there was a slight improvement. The bank raised its Meta 2027 revenue forecast by about 0.9% to $307.9 billion, but this increase was not enough to fully offset the impact of the higher expense forecast.
Capital expenditure and cash flow provide another layer of observation. According to the report's model, Meta's 2027 capital expenditure is about $242.7 billion, and free cash flow (FCF) is about negative $72.8 billion. Free cash flow reflects the balance of cash generated from operating activities after deducting capital expenditure; the negative value in the model indicates that projected operating cash is not yet sufficient to cover capital expenditure over the same period.
Meta's core contradiction lies in the fact that improvements in advertising and AI monetization need to catch up with the massive scale of investment.
JPMorgan believes that AI ad ranking and recommendation capabilities are improving user engagement and advertising returns, and is optimistic about the monetization paths for consumer and enterprise agents and model interface services, thus maintaining an "Overweight" rating and a $920 price target.
But the bank also explicitly warned that if AI monetization lags, continued investment will weigh on operating income, earnings per share, and free cash flow. The maintained rating reflects confidence in longer-term returns, while near-term spending pressure remains.
Fiverr bears the other side of the impact, AI gains will not be distributed evenly
The report's downgrade of Fiverr forms a sharp contrast with cloud providers: cloud providers are trying to capture AI computing demand, while service transaction platforms need to deal with AI's impact on traffic and transactions.
JPMorgan, citing SimilarWeb data, pointed out that Fiverr's U.S. website visits declined 22% year over year during the period for which data had been obtained in the reported third quarter, widening from a 10% drop in the second quarter. The monthly data listed in the report were a 19% decline in July and a 24% decline in August, so this statistic cannot be directly treated as the full third-quarter result.
In JPMorgan's view, changes such as AI summaries in Google Search are reducing opportunities for users to click on paid or organic search links. Even if Fiverr invests in Generative Engine Optimization (GEO) to try to increase exposure in AI answers, click-through rates from large language models remain lower than traditional search, putting pressure on the platform's ability to acquire potential customers.
The service supply side is also facing adjustments. Fiverr is transitioning from a marketplace dominated by low-value projects to a higher-end, higher-value work platform. But the report said high-value business currently accounts for only 15% of the platform's gross merchandise value (GMV), and management expects the transition to take at least six quarters.
Based on this, JPMorgan expects Fiverr's 2027 revenue to decline by about 15%, the same as in 2026, and has lowered its 2027 and 2028 revenue forecasts by about 6%, while cutting its adjusted EBITDA forecasts by 21% and 14%, respectively. The bank maintained its "Neutral" rating and lowered its price target from $11 to $10.
The report also adjusted forecasts for mobility platforms. Uber's restructuring involves about 3,300 people, and JPMorgan estimates annual savings of more than $600 million, but given the company's plan to reinvest the funds into price cuts, service options, and growth businesses, it has not yet counted this as net cost savings. Lyft faces additional expenses and cash outlays due to a settlement over driver classification disputes; the bank maintained its Neutral rating and $19 price target.
Together, these adjustments indicate that assessing the returns of AI and platform businesses requires item-by-item scrutiny along revenue sources, cost changes, and where the cash goes. Google Cloud's TPU sales, AWS's compute delivery and pricing, Meta's expenses and capital expenditures, and Fiverr's traffic and transformation progress will each determine whether their respective growth logic can be realized.
Welcome to join the official BlockBeats community:
Telegram Subscription Group: https://t.me/theblockbeats
Telegram Discussion Group: https://t.me/BlockBeats_App
Official Twitter Account: https://twitter.com/BlockBeatsAsia
