Alphabet Is Managing AI Capex Well And Seems Highly Underrated (Archive)
Alphabet’s aggressive AI capex and equity raise are mispriced, leaving shares clearly undervalued.
This 5-Minute Pitch was originally published on Seeking Alpha. It is shared here to showcase my work and track record. I also publish full 5-Minute Pitches on this site. This will be behind a paywall, accessible to Hunter Tier members.
Elevator Pitch
- Alphabet is ramping AI infrastructure capex, temporarily compressing free cash flow while positioning for long-term leadership in AI compute.
- The equity-funded $85B capital raise reflects a preference to avoid higher future debt costs and to share AI project risk with shareholders.
- Alphabet is losing some ad share, and YouTube RoAS is weakening as it faces some regulatory headwinds. So this is a risk to watch.
- Overall profit growth still far exceeds the implied 15% 7-yr earnings CAGR the market is pricing in, suggesting undervaluation of its shares.
- There is no reason to not follow the strong technical uptrend.
Read the full article here.
