Street View: Alphabet's capex jump reads as AI strength, not strain

Alphabet GOOGL.O said on Wednesday its capital expenditures could as much as double this year, marking another aggressive ramp-up in spending as the Google parent steps up investment to ease compute-capacity constraints and press ahead in the AI race.

Shares down 2.6% premarket

AI TAILWINDS BUILDING

Morgan Stanley ("overweight," PT: $330) says GOOGL's accelerating multi faceted engagement, monetization and capex investment is an indicator that the leading scaled companies with the most data, reach and ability/willingness to invest are seeing the benefits of their "flywheels"

J.P.Morgan ("overweight," PT: $395) says doubling of capex Y/Y comes from a position of strength and AI is helping Google expand its ad coverage

Jefferies ("buy," PT: $400) says doubling of capex reflects swelling AI and cloud

Pivotal Research ("buy," PT: $420) says Alphabet is rightly pressing its massive vertical advantage, leveraging its proprietary TPU/Axion (its custom AI chips) stack to take market share and cement Gemini as the dominant AI platform on 5 billion plus handsets