GM. This is Milk Road AI, the newsletter that's buying quality stocks on sale.
Google just delivered one of the best quarters in its history but got rewarded with a 7% sell-off. Let's talk about why.
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OUR ANALYST BOUGHT THE DIP IN THIS STOCK ๐ฐ
The market has developed a strange habit lately:
A company posts strong earnings โ raises its AI spending guidance โ stock sells off โ repeat.
It happened again last week with Alphabet (Google's parent company).
They had one of the best quarters in the company's history and the stock dropped more than 7% anyway.
There were two sets of numbers that spooked the market:
1. Free cash flow went negative for the first time in Alphabetโs history as a public company.
2. Alphabet raised its 2026 CapEx guidance (the money it's committing to build physical infrastructure) to as much as $205B.
Every time the market marks down a stock for raising AI CapEx, the underlying earnings power of the business gets cheaper.
The company keeps growing but its price gets discounted.
The business underneath these numbers is not struggling. In fact, itโs compounding.
Take a look at Gemini:
- It now has 950M monthly active users.
- Daily active users tripled over the past year.
- At current growth rates, Gemini crosses 1B monthly users.
For comparison, ChatGPT took years to reach 600M monthly users and it required people to actively seek it out and create accounts.
Google has a big advantage when it comes to distribution.
It's already built into products billions of people use every day: Search, Gmail, Docs, Android and YouTube.
Anthropic has a great model, OpenAI has a great model but Google has a great model along with a billion-user distribution network.
That combination is genuinely hard to replicate.
Our analyst Kyle added to his Google position last week. He's down about 13% on that entry but heโs treating this stock as a long-term play.
While the market focused on higher CapEx, Kyle focused on something else:
The underlying business just keeps getting stronger. ๐
This is exactly the type of opportunity our analysts look for inside Milk Road PRO:
Great businesses are getting sold off because the market is focused on the wrong metric.
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