‘It’s Crystal Clear,’ Says Top Investor About Alphabet Stock

Alphabet (NASDAQ:GOOG) has been stampeding upward in the days since its most recent quarterly earnings release. The company boasted grand successes on both its top and bottom lines, and management is clearly gunning for more.

Indeed, even as reported revenues of $109.9 billion, up 22% year-over-year (19% in constant currency) and operating income of $39.7 billion remain fresh in the minds of investors, the company is making additional waves.

Alphabet is now tapping the bond market in both Europe and Canada to fund its massive capex spend, which the company raised to a potential $190 billion for the current year. The company is busy raising capital, issuing €9 billion in euro-denominated bonds and $8.5 billion in Canadian-dollar bonds.

While the aggressive spending might have given investors shivers at one point, that doesn’t seem to be the case this time around. That’s because it coincides with a concrete demonstration of the company’s growing AI revenues.

For instance, Google Cloud grew 63% in Q1 and Gemini Enterprise paid monthly active users jumped 40% sequentially. Moreover, Alphabet’s cloud backlog almost doubled from the previous quarter to surpass $460 billion.

For his part, top investor Chris Neiger isn’t scared off by all the capex, due to his belief that “Alphabet has a clear AI plan.”

The investor points to Alphabet’s “popular” AI model, as well as its success selling AI services through Google Cloud and its workplace apps. He cites Google Cloud revenues of $20 billion and Gemini Enterprise’s increasing users as evidence that the strategy is working.

“It’s easy to see from both of those metrics how intertwined Alphabet’s AI spending is with the company’s growth,” notes Neiger, who is among the top 1% of stock pros covered by TipRanks.

Furthermore, the investor calls Gemini one of the top AI models, while also noting that Google Cloud is the third-largest cloud computing service (after Amazon and Microsoft). And that gives him plenty of confidence in Alphabet’s spending decisions going forward.

And he’s not alone. Neiger notes that plenty of other investors also seem to think that GOOG is on the right track, as evidenced by the recent gains.

“Alphabet’s cloud sales are surging because of AI,” sums up Neiger. (To watch Neiger’s track record, click here)

Nor has Wall Street been scared off by the capex. With 11 Buys and 1 Hold, GOOG sprints out to a Strong Buy consensus rating. Its 12-month average price target of $427.00 points to an upside of ~9%. (See GOOG stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.