Alphabet Inc.

(NASDAQ Global Select)
Back to all articles
Bullish +60

Jim Cramer on Alphabet (GOOGL): “I Don’t Care Where It Went, I Care Where It’s Going”

AI-generated analysis

📈 Jim Cramer identifies Alphabet (GOOGL) as a 'hated stock' that has lagged the market, rising only 9% for the year despite strong underlying fundamentals.

☁️ Google Cloud sales surged 82% in Q2, transforming into a major profit driver alongside core businesses like YouTube and Search.

🚗 Waymo's driverless taxi service is described as performing 'terrifically,' adding to Alphabet's diverse growth portfolio.

💰 The stock trades at approximately 17 times earnings, a multiple Cramer argues is unusually low and understates the company's value.

⚠️ Capital expenditures reached nearly $45 billion in Q2 alone as Alphabet aggressively invests in data centers and AI hardware.

📉 Heavy spending on AI infrastructure poses a risk to short-term cash flow and profit margins if monetization takes longer than planned.

🏦 Hedge fund interest remains robust with 275 funds holding the stock, compared to 265 in the prior quarter.

🔒 Short interest of float is minimal at around 1.24%, indicating low short-seller pressure on the security.

Bullish Signals
  • Google Cloud sales surged 82% in Q2, establishing it as a major profit source alongside core businesses like YouTube.
  • Waymo's driverless taxi service is performing 'terrifically,' contributing to the company's diverse growth portfolio.
  • The stock trades at roughly 17 times earnings, which Jim Cramer argues is an unusually low multiple that understates the company's value.
  • Hedge fund positioning shows strong interest with 275 funds holding the stock, up from 265 in the prior quarter.
Risk Factors
  • Capital expenditures reached nearly $45 billion in Q2 alone as Alphabet spends aggressively on data centers and AI hardware.
Full Analysis
Jim Cramer highlighted Alphabet Inc. (NASDAQ:GOOGL) as a significant opportunity on his show Mad Money, noting the stock has underperformed the broader market with only a 9% gain for the year. He emphasized that despite recent secondary offerings causing some investors to be underwater, the company's long-term trajectory remains compelling at a price of $342. Cramer pointed to specific growth drivers within Alphabet, particularly Google Cloud, which saw sales surge by 82% in the second quarter to become a major profit source alongside core businesses like YouTube. He also noted strong performance from Waymo and suggested that while AI readiness is a question mark, the company's valuation at roughly 17 times earnings appears undervalued relative to its operational momentum. However, the article notes substantial capital expenditure pressures, with Alphabet spending nearly $45 billion in Q2 alone on data centers and AI hardware. While hedge fund positioning remains strong with 275 funds holding the stock and minimal short interest, Cramer's bullish thesis relies on the market undervaluing this growth, though investors must balance these long-term edges against potential short-term cash flow impacts from heavy investment.