Alphabet's Earnings Fall Short of Expectations, Free Cash Flow Turns Negative for the First Time. Capital Expenditure Increase for AI Arms Race Has an Impact

Alphabet, the parent company of Google, along with Tesla and IBM, announced their earnings but fell short of market expectations, causing their stock prices to drop. Financial expert Yuan Muhao pointed out that due to a significant increase in capital expenditure, Google has experienced its first negative free cash flow in history. The AI arms race has entered a stage where companies are borrowing money to increase capital expenditure. Alphabet's revenue for the previous quarter was $119.8 billion (approximately NT$3.8666 trillion), with earnings per share of $2.85. Capital expenditure increased by 100% compared to the same period last year, reaching $44.9 billion (approximately NT$1.449 trillion). Search business revenue grew by 17%, and cloud business revenue grew by 82%, reaching $24.8 billion (approximately NT$80.03 billion). Alphabet's stock price fell by 1.24% on the 22nd trading day and continued to decline after the earnings announcement. Yuan Muhao mentioned that the earnings reports of tech giants have started to be released, and after Google's earnings announcement, the stock price fell by more than 3%. This 'ethereal' earnings report not only did not 'ignite' Google but also caused the stock price to fall. The reason is straightforward: 'The earnings report is beautiful, but reality is bone-chilling.' Google's super-high EPS is actually mostly 'unrealized gains.' After deducting the equity income from Anthropic and SpaceX, the EPS dropped to $2.85, below the expected $2.89. Yuan Muhao pointed out that the significant increase in capital expenditure has caused Google to experience its first negative free cash flow in history, with a negative $5.9 billion (approximately NT$190.4 billion). Therefore, Google has stopped buying back shares and issued $70 billion (approximately NT$2.2593 trillion) in shares and bonds. Google has transformed from a cash cow to a financing-type company that cannot squeeze out milk. Yuan Muhao mentioned that the AI arms race has officially entered a stage of borrowing money to burn. The speed of AI monetization and the growth of capital expenditure, who will ultimately win? Google's capital expenditure in the second half of the year will exceed $120 billion (approximately NT$3.8731 trillion). The operating cash flow in the third quarter needs at least $50 billion (approximately NT$1.6137 trillion) to ensure that free cash flow will not turn negative again. Next year's capital expenditure is expected to reach $25 billion to $30 billion (approximately NT$8.688 trillion to NT$9.6826 trillion). Where will the money come from? This ethereal earnings report has raised an important question for the AI capital expenditure war. More exclusive insider information from Wind Media: • Can Taiwan's stock market handle the roller coaster? Yuan Muhao names three ETF combinations for 'winter survival and peak attack': having both defense and output • Has the global stock market crash ended? Yuan Muhao reveals the latest views from Wall Street. A Morgan Stanley analyst even urges 'shorting semiconductor stocks' • Listed for one month and already paying dividends! 00406A's annualized dividend yield exceeds 17%. Yuan Muhao breaks down two key points: 75% of funds are heavily invested in this group