If you suddenly inherited $50,000, and you didn't have some short-term expense that needed paying off, you might be inclined to look for someplace to invest it and perhaps grow it into something bigger. $50K is a lot of money to invest all in one place, so a safer bet would be to spread it out across several stocks.
Alphabet's Q4 Dip: Why I'm Going All In
Anyone can grow their money in the stock market. A smart way to get started is to buy shares of top companies that millions, if not billions, of people depend on every day.
In January, Chinese start-up DeepSeek introduced an artificial intelligence (AI) chatbot that quickly became the most downloaded free mobile application in the U.S. Importantly, the base large language model behind the DeepSeek application allegedly cost $6 million to train and reportedly outperforms top U.S. models on certain benchmarks.
In the most recent quarter, Alphabet's (NASDAQ: GOOG) revenue rose 12% to $96.5.
Alphabet (GOOGL -3.27%) (GOOG -3.19%) share prices tumbled as much as 8.4% following its Q4 earnings report as the market came away disappointed with the tech giant's cloud computing revenue growth rate. Like a number of other large tech companies, Alphabet is also set to ramp up its artificial intelligence (AI) infrastructure spending this year.
There's no denying it: Alphabet's (GOOG -3.19%) (GOOGL -3.27%) cloud computing business simply came up short of expectations in the fourth quarter. Investors aren't exactly thrilled with the company's intended expenditures on artificial intelligence (AI), either.
Agentic AI is advancing rapidly, automating cognitive and decision-making tasks with artificial intentionality, enabling autonomous task completion and strategic planning without human intervention. Open-source AI models like DeepSeek, LLaMA, and Mistral are eroding big tech's dominance by democratizing AI and leveraging decentralized training methods similar to blockchain. The lack of differentiation among AI models like ChatGPT, Claude, and Gemini presently poses a commoditization threat, but Alphabet's Gemini benefits from durable ecosystem advantages.
I reiterate a Buy rating for Alphabet/Google, with a fair value of $232 per share, driven by leadership in AI, cloud, and data analytics. Alphabet's Q4 FY24 results showed 12% constant revenue growth and 31% EPS growth, with Google Cloud growing 30.1% year-over-year. Rising CAPEX spending, especially in AI and cloud infrastructure, is strategic despite potential margin pressures from higher depreciation and R&D costs.
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Google's slight revenue miss and elevated 2025 CapEx outlook triggered a stock drop, creating a better risk-reward opportunity. Core businesses like Search, YouTube, and Cloud show solid growth, with new initiatives and AI solutions driving opportunities. The $75B CapEx is seen as a positive long-term investment, indicating management's confidence in sustained demand and high returns.
Alphabet's Q4 earnings beat EPS estimates but missed revenue expectations, causing a sell-off; I believe this is an opportunity for long-term investors. Despite concerns over slowing cloud growth, Alphabet remains highly profitable with strong financials, generating $100 billion in net income and $350 billion in annual revenue. Alphabet's robust balance sheet, significant cash reserves, and aggressive share repurchase program underscore its financial strength and commitment to shareholder value.