$GOOGL · Tom Nash · 2026-10-29

Google's share price dropped by 10%.

because the third company I want to talk about today and the third company that was hurt yesterday is Google, and it is on my list. It is one of the top five stocks. This is a new Palantir pattern.

So, Google, and it's strange to talk about Google as a Palantir model again, but look at Google now. If you look at Google, you'll find that it dropped by 10% overnight. Okay, why?

Okay, so we're now looking at a price-to-growth ratio of 0.6 and a forward P/E ratio of 19. A stock that only made 6% last year? Half the performance of the S&P 500 index? Half the performance of the S&P 500 index?

Revenue growth of 25%. The cloud is growing at 103%, making it the fastest growing cloud on the planet. Operating income increased by 30% and the operating margin by 32%. With weak liquidity compared to debt and eight times sales, you could buy this company.

So why is it in decline? Oh, because they spend a lot of money, Tom. Look at their negative free cash flows. Look at the amount of money they are spending to build these cloud data centers.

My friend, are we serious here? Are we really saying that Google is a bad company because it spends money on capital expenditures to gain market share in the world's largest industry, an industry that already generates a lot of money for Google and is growing at 103%?

Are we really serious that we've suddenly decided that spending money is bad, regardless of the purpose? I contend that the risks of not spending on capital expenditures, if you are a giant cloud computing company, are far greater than the annoyance of some stupid investors who are scared right now.

Now, if I show you the numbers here, it will be perfectly clear. Well, Google's revenue came in lower than expected. Let's analyze it, okay? 127.58 versus 127.97. Oh, my God. A deficit of 0.3%.

Are you serious, brother? Well, capital expenditures have doubled, Tom. This is bad . We went from 24 billion to 51 billion. Is this bad? We are literally buying land in the largest acquisition in history, and it's not that they are buying future ideas, it's already generating tons of money.

But Tom, free cash flow is negative. Of course it is because you are increasing capital expenditures. Don't you know mathematics? Yes, they have a $10 billion deficit due to capital expenditures, but that's part of the long game , not the short game.

If Google had been trying to please traders and had achieved positive free cash flow without doing so, they would have lost in the long run. I fully understand what they are doing .

They are simply saying, "Look, screw you and your short- sighted mentality." We are pursuing the ultimate goal, and if that bothers you, so be it . So be it. But I want to show you something else .

If you look at this, you know, YouTube and search aren't growing fast enough . Only 9% and 12%. Advertising revenue did not meet expectations. We received 82 billion instead of 83 billion.

Oh my God, spare me this talk . Who cares about this? Who cares about this? Real investors do n't care about YouTube and Google search, with all due respect. Look at real investors , and what they are actually looking at.

Cloud computing services in the third quarter rose by 103%. It currently generates 30 billion annually. Cloud computing operating profits rose by 209%. The operating profit margin for cloud computing is now 36%.

And Google is sitting on a pile of backlogged requests. They literally need to build capacity to serve these backlogged orders of 560 billion. So, 30 billion annually, and there are 600 billion in backlogged requests that need to be met, and capital expenditures need to be injected .

Good? Cloud computing now accounts for 24% of Google's total business. This may not seem like a dominance, but just last year the figure was 15%, and by the time we speak next year, it will be much higher.

Cloud computing is the foundation. Google is vertically integrated , and its Tensor Processing Units (TPUs) are the greatest innovation since sliced bread was invented . Google is the fastest growing, and most vertically integrated cloud computing provider in the world, with an annual growth rate of 103%.

Would you say that the problem is that this is what bothers you?

just like Google does with Tensor Processing Units ( TPUs).

namely Nvidia and Google, which is the world’s most vertically integrated and fastest-growing cloud provider . It's not Bloom, but Amazon is huge , and Google is huge, but that does n't matter.

At some point, the next Palantir is just Palantir, Bloom , Amazon, Google, and so on.