Dr J Rould
Full-Time Tech Investor, Quantum/Cybersecurity, Philosophy Background
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'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 remains fundamentally strong because revenue rose 25%, Cloud grew 103% to $30.7B with record margins, and search queries reached a five-year high. Ads grew 12% instead of 17% expected, while 2027 capex rises again, so the market is repricing it from a cash-printing ad company into an AI spender. x.com
Alphabet's core Search growth is slowing while AI spending surges, making the selloff look deserved despite fast Cloud growth. Search growth fell from 19% to 17% to 12% over three quarters; Search now represents just under half of revenue. The stock could fall to $250, though Amazon is the preferred buy. x.com 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
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 search business will inevitably be cannibalized by AI, and search is its core advertising revenue driver. Google can pivot, but Meta will always have social networks people depend on to feel connected, making Meta the easier choice. x.com
Alphabet's AI spending is visibly turning into revenue, more than many other names can say today. Cloud is nearly a quarter of revenue, growing 103% at a 36% operating margin with a $561B backlog; total revenue rose 25%, operating income 30%, and margins are expanding. Free cash flow has been negative for two quarters, capex keeps climbing into 2027, and AI leaves search monetization uncertain. x.com
Alphabet's rapid cloud growth and diverse profit sources make it a long-term buy below 20x forward earnings. Cloud grew 103% this quarter, despite short-term fears about search and heavy spending. 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
Alphabet's cloud business could reach $100 billion over the next year or so. Kalshi Finance says Google Cloud revenue grew 103% to $30.7 billion. Alphabet is spending $51.36 billion on AI infrastructure and reported an $8.664 billion equity-securities loss because of SpaceX. The stock looks like a good buy on the dip, with prices below $300 in oversold territory. x.com x.com
