Alphabet Inc._ Capex, Cloud, & Costs the Culprits, But Solid Ad Growth in Search & YouTube; Lowering Estimates Slightly, But Remain Positive on AI Innovations & Ads; Remain Overweight w_$220 PT. Wed Feb 05 2025

KEY THOUGHTS AFTER CALLS WITH MANAGEMENT • Another Year of Heavy Infra Investment. Rather uncharacteristically Google guided to capex spending — $75B in 2025, a 43% increase on top of a 63% increase in 2024. Capex components remain the same — servers, data centers, networking equipment — and reflect the strong demand GOOGL is seeing from both external clients & internal constituents. The outlook is well above our$ 62B going in & consensus of $57B. We model capex step-ups through the year, but we recognize q ...