Thread by @itsmichaelluu

For 1st time ever, $GOOG reported negative cash flow. It can easily crash 10% in right now.

But, here's why its actually bullish:

In 1-2 years $GOOG should be at $600+ and here's why:

1. Revenue: $119.8B, up 24% — BULLISH

The first thing that jumps out at me is that this is Alphabet's 12th straight quarter of double digit growth, and it's accelerating, not fading. A company this size growing 24% shouldn't be normal, but here we are. US revenue alone ripped 32%. That's my green light right at the top.

2. Google Cloud: +82% to $24.8B — BULLISH

This is the number I care about most, and it's the headline everyone will lead with. Cloud didn't just grow, it accelerated into the 80s on enterprise AI demand. When I'm sizing up whether Google is winning the AI buildout, this line is my scoreboard, and right now it's flashing green.

3. Cloud operating income tripled to $8.8B — BULLISH

Here's what most people miss: I'm not just watching Cloud's top line, I'm watching whether it makes money. Margins went from ~21% to ~36% year over year.

That tells me this isn't growth I'm paying for with burned cash, it's growth with real leverage underneath it. To me, that's more bullish than the 82% itself.

4. Operating income +30%, margin 34% — BULLISH

This is the combo I always hunt for: spending aggressively on AI while expanding margins. Most companies do one or the other. Alphabet did both this quarter, and that's the sign of a business with genuine pricing power and discipline.

5. EPS $9.11, up 294% — NEUTRAL (and here's your trap)

Don't let anyone sell you that 294% number. When I dig in, $6.26 of that EPS came from a one time $99B unrealized gain on their equity stakes, paper money, not the business. Strip it out and core EPS is around $2.85 vs $2.31, so really ~23% growth.

Still great. But quote the 294% headline and someone smarter in the replies will eat you alive.

6. Free cash flow went NEGATIVE: -$5.86B — BEARISH

This is the one that made me sit up. For the first time I can remember, Alphabet burned cash for the quarter. Trailing twelve FCF is still $53B, but the trajectory is falling off a cliff as they spend. I'm not panicking, but I'm watching this like a hawk, and so should you.

7. CapEx doubled to $44.9B — MIXED

Here's the direct cause of that negative FCF: they're spending like crazy on AI infrastructure. I read this two ways at once, bullish if you believe the buildout pays off, bearish if you care about near term cash. I lean toward "this is the price of staying in the game."

8. Buybacks went to ZERO, and they raised ~$70B in equity and debt — BEARISH/NEUTRAL

This is the structural shift nobody's talking about. A year ago Google bought back $13B of stock. This quarter? Zero. Instead they raised ~$50B in equity and $20B in notes, and doubled their long term debt. When a cash machine flips into a capital raiser, I take note. That's dilution and leverage where there used to be neither.

9. Search +17% to $63.3B — BULLISH

This is my favorite point, because it kills the biggest bear case on the stock. Everyone's been screaming "AI is going to kill Google Search." The data says the opposite: AI features are driving query growth. Until this line breaks, the "Search is dying" thesis is dead in the water.

10. Gemini traction is real — BULLISH

Numbers don't lie: 950M monthly actives on the Gemini app, 22B API tokens a minute, and roughly 90% of the Fortune 100 on Gemini Enterprise. When I want proof Google's AI is being used and not just demoed, this is it, and it flows straight into those Cloud numbers.

I'm keeping my eyes on their AI infrastructure buildout, because that ~$70B they just raised goes straight into data centers and compute. That's the bet.

The one that excites me most is TPU systems as a product. Google is now selling its own AI chips to enterprise customers, and that inventory jump from $2.4B to $10B tells me they're building to ship a lot more. Brand new revenue line, and it puts them head to head with $NVDA in a way most people aren't pricing in yet.

I'm also watching Gemini Enterprise, where near full Fortune 100 penetration gives them a massive base to upsell into. Their new Gemini 3.5 Flash Cyber model pushes deeper into enterprise security, a market they've barely tapped. And in the background, Waymo keeps scaling as the real optionality inside Other Bets, while YouTube proved this quarter it's becoming the place for live global events, with 1.7B unique viewers on World Cup content alone.

Bottom line the way I see it: the bull case is Cloud accelerating, margins expanding, and Search refusing to die. The bear case is capex exploding, free cash flow going negative, and buybacks off with dilution on.