Alphabet and Meta stock prices rose following a major cloud partnership announcement and central bank rate-cut expectations. Meta will pay Google $10 billion over six years for access to Google Cloud storage, servers, networking, and other products. Meta previously used AWS and Microsoft's Azure and may continue doing so, reflecting large cloud needs as Meta pursues AI ambitions. Meta and Alphabet remain top rivals in digital advertising, with 98% of Meta's revenue in the first half of 2025 coming from digital ads, making their cloud partnership notable and potentially material for Alphabet's valuation and investor sentiment.
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. Additionally, Meta and Alphabet are each other's largest competitors in the digital advertising market. And in the first half of 2025, 98% of Meta's revenue came from digital ads. Hence, in a sense, it is remarkable that these two would become partners in a different business.
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