Alphabet (GOOGL) is significantly increasing its capital expenditure on artificial intelligence infrastructure, with analysts noting the investment is being self-funded from free cash flow. A Needham analyst reiterated a Buy rating, stating the spending builds competitive “moats” and that monetizing consumer data through cloud services and large-language models will diversify revenue away from advertising, reducing investor risk. JP Morgan also remains bullish on the stock as the company offsets AI costs by renting out its infrastructure.
Alphabet (GOOGL) has greatly increased its capital expenditure as the artificial intelligence industry surges, dedicating millions to AI investments including partnerships and data centers. Wall Street analysts are becoming increasingly favorable of this development.
One analyst at Needham recently reiterated a Buy rating on Alphabet (GOOGL) stock, saying the tech giant shouldn’t reduce its capital spending. Needham’s Laura Martin estimates that Google will self-fund 100% of its capital spending between 2025 and 2028 from its free cash flow, lessening fears of borrowing or big bond sales.
Additionally, the analyst believes monetization of Google’s global consumer data through enterprise cloud licensing fees and large-language model annuity payments will diversify the company’s revenue streams away from advertising. “GOOGL is buying itself deeper moats as it increases CapX, because few other companies can keep up,” added Martin, stating it will help lower investor risks and expand the stock’s valuation multiple.
Furthermore, bulls are regaining ground surrounding Alphabet (GOOGL) stock on The Street. The stock has received an update from the leading investment bank JP Morgan, which remains bullish on its prospects as it is offsetting AI spending by renting out AI infrastructure.
