alphabet (aka “Google”) is clearly firing on all cylinders, and probably more so than the Street realized. This quarter was frankly a disaster. The surge in cloud revenue and increased guidance for capital expenditures (capex) indicate that the company’s large investments may be paying off sooner than many people (perhaps many within the company) expected.
The point couldn’t be clearer. Alphabet is not only surviving the AI revolution, but in many ways leading it.
why?
Because while the investment amount is huge, the company is currently making profits in this area. Cloud and artificial intelligence were definitely the stars of the quarter. Google Cloud continues to grow rapidly, incorporating enterprise workloads as companies accelerate their AI builds. Demand for Gemini-powered services and AI infrastructure is exceeding even the most optimistic forecasts. In a show of great confidence, management raised its full-year capital spending outlook to as much as $190 billion. This surprising number shows that Alphabet is fighting for generational advantage, not quarterly optics.
Alphabet from the beginning of the year
So how do you make money using options?
transaction:
• Buy the August 400 strike call
• Sold June 350/420 strangle
• Difficulty: Advanced
I support raising some money by selling the June 350/420 stock and buying the August $400 strike call that captures the next earnings event. By selling the 350 put, you run the risk of being forced to buy the stock at that strike price, where the stock was trading prior to this earnings release. There are probably many investors who wish they had done that. This creates a bit of pent-up demand at that level. On the other hand, selling the June 420 call would further reduce costs.
In fact, this trade, even if it requires premium spending, could actually be marginally profitable at expiration in early June, even if the stock price remains the same between now and beyond.
Selling 420 limits the upside for now, but leaves open the possibility of selling further premium to the August call after the June expiration, and maintaining a moderately bullish position will give the stock time to reset before rising again.
