Is Alphabet's Massive AI Spending a Problem? The CFO Just Revealed Everything Investors Need to Know in a Single Sentence.

Is Alphabet's Massive AI Spending a Problem? The CFO Just Revealed Everything Investors Need to Know in a Single Sentence.

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is spending more cash than it's generating, and investors are worried. The company's capital expenditures totaled $51.4 billion last quarter, mostly related to its artificial intelligence (AI) compute build-out. That number could continue to climb in the fourth quarter and in 2027.

Many investors are concerned that Alphabet is overextending itself, raising additional capital to fund a speculative investment. That sentiment caused shares to tumble after the company's third-quarter earnings release. For long-term investors, the most important detail came during the company's earnings call, when CFO Anat Ashkenazi revealed everything you need to know in a single sentence.

Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

The investment thesis for Alphabet has changed

For years, Alphabet ran a business with extremely low capi...