Alphabet shares according to quarterly figures: Why the increased investments are positive in the long term

Alphabet shares according to quarterly figures: Why the increased investments are positive in the long term

According to a report by www.deraktionaer.de, Alphabet shares have lost over seven percent since the quarterly figures were published. This decline is due to weaker than expected advertising sales and increased capital expenditures. Alphabet's capital expenditures rose 45 percent to $11 billion last quarter, primarily due to higher spending on technical infrastructure in the server sector followed by data centers. Alphabet's chief financial officer, Ruth Porat, cited the extraordinary application of AI for users, advertisers, developers, cloud customers and governments, as well as the long-term growth opportunities associated with it, for the increase in capital spending. She expects investment spending in the current financial year to be significantly higher than in 2023.

The rising capital expenditure could cause short-term uncertainty among investors and analysts as no specific figure was given. Severance costs are also weighing on the company, with approximately $700 million spent in the first quarter and a total of $2.1 billion last year. Despite weaker advertising revenue, bullish analysts see further AI potential at Alphabet. However, the increased investment expenditure in conjunction with the weaker advertising business is currently playing into the bear's hands, according to the experts.

However, the increased and continuing increase in investments should not unsettle long-term investors, as AI pursues specific goals and is not a metaverse. It is therefore recommended to stick with Alphabet stock. The impact of increased capital spending on the market and industry could create uncertainty in the short term, but benefit from AI growth opportunities in the long term.