We buy 50 shares of Alphabet at approximately $301 per share. After Tuesday’s transaction, the Jim Cramer Charitable Trust will acquire 200 shares of GOOGL stock, increasing its stake from 1.15% to approximately 1.55%. We’re stepping in again as Alphabet stock continues to fall from its February highs. The last purchase was last Tuesday for about $318 per share. Alphabet is currently down about 9% since its earnings release a few weeks ago. We thought the results were great, with accelerated revenue growth in search and Google Cloud driving healthy revenue and earnings per share. But the main problem, and this has affected all major mega-cap tech stocks in the past few weeks, is that free cash flow is drying up due to ambitious capital spending plans. Google’s parent company said it plans to spend $175 billion to $185 billion in capital spending in 2026. That’s far higher than the Street’s estimate of $115 billion and the $91 billion it spent last year. GOOGL 1Y Mountain Alphabet 1 Year It will take time for the market to get used to this level of spending and reduced free cash flow. Alphabet generated just under $70 billion in free cash flow in both 2024 and 2025, but that number is expected to drop to about $33 billion in 2026, according to FactSet. For comparison, the Street is currently modeling MetaPlatform’s free cash flow of just $6 billion and Amazon’s outflows of $10 billion, according to FactSet. Microsoft is expected to generate about $65 billion in free cash flow over the next four quarters. Only time will tell whether its massive capital investment pays off, but we think Alphabet has a better path to victory than its peers, which is why we’ve chosen it as one of the Magnificent Seven stocks to buy in this broad tech selloff. Google Search revenue is driven by AI, due to increased engagement with AI-powered queries. In the cloud, Google Cloud appears to be taking market share from its peers, as its backlog grew 55% year-over-year to reach $240 billion at year-end. (Jim Cramer’s charitable trusts are long GOOGL, META, AMZN, MSFT. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
