πππI believe
$Alphabet(GOOG)$ will close between -5% to +5% (C) on the first day of trading after earnings. Why? There is currently a tug of war between its robust revenue growth and unprecedented capital expenditure.
Alphabet is expected to post a highly impressive USD 127.4 billion to USD 127.9 billion in revenue, up 25% YoY. This is driven by an estimated 80% hypergrowth in Google Cloud and robust AI assisted search monetisation.
However Wall Street is hyper focused on Alphabet's full year 2026 Capex budget of USD 195 billion to USD 205 billion.
If Alphabet beats revenue expectations, but guides Capex even higher for 2027, I believe the market will penalise Alphabet over fears of compressed operating margins and another quarter of negative free cash flow.
Alphabet is currently trading at just 15.7x forward earnings. It's time to go bargain hunting if Alphabet drops below 5%.
@Tiger_Earnings @TigerStars @Tiger_comments
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