Alphabet is hard to bet against now that Berkshire Hathaway has recently bought the stock, a strong vote of confidence. x.com  x.com 

Alphabet's vertical integration and moat make its current valuation attractive. Its forward P/E is 19.78, below the 22.51 median shown since 2019. Alphabet is also valued below Tesla and SpaceX combined, despite the chart showing Google's quarterly revenue far exceeding theirs; that comparison does not add up. x.com  x.com 

Alphabet's free cash flow has gone negative for the first time in its history, per Barchart, an odd profile for one of Buffett's last buys at a $4T valuation. x.com  x.com 

Alphabet's earnings weakened the investment case because it missed on YouTube, Search, services, subscriptions and earnings, while reporting $0 in buybacks and double the negative free cash flow of last quarter. Cloud revenue was impressive, but Alphabet is a hold here and needs to come down significantly before adding. x.com 

Alphabet's $80B capital raise, with Berkshire Hathaway committing $10B in a private placement, funds compute for unprecedented customer demand, and executives at Google and Berkshire likely understand that allocation better than skeptical retail investors. Unlike Meta's metaverse gamble, this is a joint effort to fund AI data-center buildout, and the stock fell only 1% on the news while still up 35% since April. x.com  x.com  x.com 

Alphabet now looks like a shale company that cannot stop spending on negative-ROIC investments, the habit that left shale drillers trading at 3x EBITDA. Per @TheStalwart, Alphabet is raising $80 billion of equity, including $10 billion from Berkshire Hathaway in a private placement, to expand its AI infrastructure, much as shale firms funded negative-ROIC wells with any capital available. This AI mania may go on longer. x.com  x.com 

Berkshire Hathaway's $10B investment in Alphabet's $80B equity raise for AI infrastructure endorses the AI buildout that bears said would fail. By participating, Berkshire is effectively saying the dilution needed to fund the next phase of AI infrastructure won't matter in the long run. The upward momentum should only accelerate from here. x.com 

Alphabet's exceptional revenue growth and expanding margins make a discount attractive if the market offers one. Quarterly revenue reached $125 billion, up 25%; search is growing faster than YouTube ads. The disappointing result reflects a mark-to-market on SpaceX, while the earnings call sounded great. x.com  x.com  x.com  x.com 

Alphabet's businesses beyond search are why it will lead the real AI boom. Google Cloud, DeepMind and Waymo broaden its reach, and its $900 million SpaceX investment is now worth $85 billion. Fear emerging as the shares fall is an opportunity; a decline toward the buy zone is welcome, even as Q3 capex has taken a large hit out of free cash flow. x.com  x.com  x.com  x.com 

Alphabet offers attractive risk/reward because its earlier equity raise suppressed the shares despite strong growth. The $80B-plus raise should suffice for now; another next year is uncertain. Search grew 17% in the prior results, while cloud revenue more than doubled in the latest. Investment losses, not the business, hit EPS; weaker free cash flow puts investors off. A search slowdown would be a warning flag, though Gemini and other businesses could soften the blow. x.com  x.com  x.com  x.com  … Show more