Google Plans $20 Billion Bond Sale to Fund AI Investments
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy GOOG?
Source: CNBC
- Surging Capital Expenditures: Alphabet anticipates capital expenditures reaching $185 billion in 2025, more than double last year's figures, reflecting the company's significant commitment to AI and infrastructure, which may impact its core advertising profitability.
- Bond Financing Plan: To support its AI ambitions, Alphabet plans to raise $20 billion through a U.S. dollar bond sale, expected to occur in four tranches, including a 100-year sterling bond, indicating strong market interest with oversubscription by five times.
- Compute Capacity Risks: CEO Sundar Pichai highlighted compute capacity, energy, and supply chain constraints as major challenges during the earnings call, indicating that Google must effectively manage its resources to maintain competitiveness amid rapidly growing AI demand.
- Ad Revenue Growth: Despite potential threats from AI to its search and advertising business, Google's fourth-quarter ad revenue increased by 13.5% year-over-year to $82.28 billion, demonstrating the company's success in adjusting its advertising strategies to meet market changes.
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Analyst Views on GOOG
Wall Street analysts forecast GOOG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for GOOG is 336.08 USD with a low forecast of 255.00 USD and a high forecast of 400.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 323.100
Low
255.00
Averages
336.08
High
400.00
Current: 323.100
Low
255.00
Averages
336.08
High
400.00
About GOOG
Alphabet Inc. is a holding company. The Company's segments include Google Services, Google Cloud, and Other Bets. The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Its Other Bets segment is engaged in the sale of healthcare-related services and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform provides access to solutions such as artificial intelligence (AI) offerings, including its AI infrastructure, Vertex AI platform, and Gemini for Google Cloud; cybersecurity, and data and analytics. Google Workspace includes cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Bond Financing Plan: To support its AI ambitions, Alphabet plans to raise $20 billion through a U.S. dollar bond sale, expected to occur in four tranches, including a 100-year sterling bond, indicating strong market interest with oversubscription by five times.
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- Entertainment Plan Pricing: The Entertainment Plan is priced at $54.99 per month for the first three months, dropping to $44.99 afterward, offering channels like Comedy Central and HGTV, designed to cater to diverse family viewing preferences.
- Comprehensive Plan Release: The News + Entertainment + Family Plan costs $59.99 per month for new users in the first three months, increasing to $69.99, aiming to attract a broader audience by integrating various content types and enhancing market competitiveness.
- Main Plan Cost: YouTube's main TV plan is priced at $82.99 per month, including over 100 networks, providing a rich content selection that aims to enhance user experience and drive subscription growth through a diverse programming mix.
See More
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- Market Expansion Plans: The new funding will enable Waymo to expand to 20 new U.S. cities this year and plans to launch its self-driving service in international cities like Tokyo and London by 2026, marking a significant acceleration in its commercialization efforts.
- Significant User Growth: Waymo completed 15 million rides last year, more than tripling from the previous year, indicating the reliability of its technology and strong market demand, further solidifying its leadership position in the autonomous vehicle market.
- Enhanced AI Ecosystem: Alphabet's AI product, Google Gemini, has seen monthly active users rise from 400 million to 750 million, and its collaboration with Apple will make Gemini the underlying model for a new version of Siri, expected to generate billions in revenue for Alphabet, further driving growth in its AI business.
See More
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- Expansion Strategy: The new funding will enable Waymo to expand into 20 new U.S. cities and internationally by 2026, marking a significant shift from concept validation to commercial operations, which is expected to drive revenue growth for the company in the future.
- Significant User Growth: Waymo completed 15 million rides last year, more than tripling from the previous year, indicating the reliability of its technology and strong market demand, further solidifying its leadership position in the autonomous vehicle market.
- AI Ecosystem Integration: Alphabet's Gemini chatbot user base surged from 400 million to 750 million, showcasing the strong appeal of its AI services, while a collaboration with Apple will further enhance Gemini's application, boosting Alphabet's competitiveness in the AI sector.
See More
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- Surging Capital Expenditures: Alphabet anticipates capital expenditures reaching $185 billion in 2025, more than double last year's figures, reflecting the company's significant commitment to AI and infrastructure, which may impact its core advertising profitability.
- Bond Financing Plan: To support its AI ambitions, Alphabet plans to raise $20 billion through a U.S. dollar bond sale, expected to occur in four tranches, including a 100-year sterling bond, indicating strong market interest with oversubscription by five times.
- Compute Capacity Risks: CEO Sundar Pichai highlighted compute capacity, energy, and supply chain constraints as major challenges during the earnings call, indicating that Google must effectively manage its resources to maintain competitiveness amid rapidly growing AI demand.
- Ad Revenue Growth: Despite potential threats from AI to its search and advertising business, Google's fourth-quarter ad revenue increased by 13.5% year-over-year to $82.28 billion, demonstrating the company's success in adjusting its advertising strategies to meet market changes.
See More
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- Capital Expenditure Surge: Amazon has announced a capital expenditure increase to $200 billion for 2023, with CEO Andy Jassy stating the company is monetizing capacity as quickly as possible, which may exert pressure on short-term financial performance.
- Strong Chip Performance: The installation of 1.4 million Tranium2 AI chips in Amazon's data centers has resulted in an annual revenue run rate of $10 billion, growing over 100% year-on-year, indicating robust growth potential in AI infrastructure.
- Significant Cost Advantage: Amazon's Tranium chips offer 30% to 40% better performance-per-dollar compared to Nvidia's GPUs, reducing operational costs for AWS customers and potentially attracting more AI companies to choose Amazon as their infrastructure provider.
- Intensifying Market Competition: As companies like Amazon increasingly rely on their own AI chips, Nvidia's market dominance is being challenged, which could impact its profit margins, especially as competition in the AI accelerator market intensifies.
See More
