tech
Alphabet is winning the AI revolution. Here's how Mike Khouw is trading it
The takeaway could not have been clearer: Alphabet isn't just surviving the AI revolution — in many ways, it's leading it.
TL;DR
- Alphabet's recent quarter was exceptionally strong, exceeding expectations.
- Surging cloud revenue and increased capital expenditure guidance suggest AI investments are yielding results.
- The company is positioned as a leader in the AI revolution, not just a participant.
- Google Cloud is growing rapidly as businesses adopt AI.
- Demand for Gemini-powered services and AI infrastructure is higher than forecasted.
- Alphabet raised its full-year capex guidance to $190 billion, signaling long-term dominance ambitions.
- An advanced options trade is proposed: buy August 400-strike calls, financed by selling a June 350/420 strangle.
- The strategy involves selling puts at a previous trading level, anticipating pent-up demand, and selling calls to reduce cost while capping immediate upside.
- The trade could be marginally profitable even if the stock remains unchanged by June expiration.