Under Google’s massive financing, even Buffett has been pulled into the AI race.
Google ($GOOG) has already raised a historic $80 billion this year.
Google’s cash-flow problems are worse than what has been shown.
In just a few months, the company’s debt has surged from $28 billion to over $100 billion, nearing its debt leverage limit—continued expansion will inevitably lead to a downgrade in credit rating.
Google can only pursue equity financing, using future earnings to survive now.
So I’ve always said that once Google becomes a heavy-asset company, the valuation logic for the whole company must change. A heavy-asset company is the typical “dressed to impress but broke”—it has nothing in hand.
Going forward, Google’s survival will rely extremely heavily on financing provided by financial institutions; heavy assets will drain Google’s cash flow.
But Buffett still has big presence. Google directly allocates $10 billion to Berkshire via a private placement and fixed-price sale—this price should be quite competitive.
In future AI competition, it will inevitably come at the cost of a few companies exiting the market in extremely brutal fashion. And ultimately, if Google can’t hold on, it should be marked by large-scale sales of computing capacity to the outside.
Finally, I’d like to cast doubt on Google’s claim that it already has $500 billion in backlog cloud-service orders. There’s a lot of padding there—very likely like the intent-based order commitments O.S. made to Oracle. In reality, the company itself probably doesn’t have that much money, but Google’s investments are real and concrete, consuming cash all the way.
Market sentiment is also showing panic and dissatisfaction—companies with tight cash flow that still issue debt to do equity funding won’t be liked by anyone.
$GOOGLB
#Alphabet将资本支出上调至最高2050亿美元 #七巨头单日市值损失7970亿美元
Google ($GOOG) has already raised a historic $80 billion this year.
Google’s cash-flow problems are worse than what has been shown.
In just a few months, the company’s debt has surged from $28 billion to over $100 billion, nearing its debt leverage limit—continued expansion will inevitably lead to a downgrade in credit rating.
Google can only pursue equity financing, using future earnings to survive now.
So I’ve always said that once Google becomes a heavy-asset company, the valuation logic for the whole company must change. A heavy-asset company is the typical “dressed to impress but broke”—it has nothing in hand.
Going forward, Google’s survival will rely extremely heavily on financing provided by financial institutions; heavy assets will drain Google’s cash flow.
But Buffett still has big presence. Google directly allocates $10 billion to Berkshire via a private placement and fixed-price sale—this price should be quite competitive.
In future AI competition, it will inevitably come at the cost of a few companies exiting the market in extremely brutal fashion. And ultimately, if Google can’t hold on, it should be marked by large-scale sales of computing capacity to the outside.
Finally, I’d like to cast doubt on Google’s claim that it already has $500 billion in backlog cloud-service orders. There’s a lot of padding there—very likely like the intent-based order commitments O.S. made to Oracle. In reality, the company itself probably doesn’t have that much money, but Google’s investments are real and concrete, consuming cash all the way.
Market sentiment is also showing panic and dissatisfaction—companies with tight cash flow that still issue debt to do equity funding won’t be liked by anyone.
$GOOGLB
#Alphabet将资本支出上调至最高2050亿美元 #七巨头单日市值损失7970亿美元