TL;DR

Alphabet’s massive Q2 profits mask a risky gamble on AI and inflated stock valuation, echoing past market crashes. Investors risk substantial losses if the AI bet doesn’t pay off, repeating the mistakes of past bubbles.

Story

Another quarter, another mountain of Alphabet’s profits. $96.4 billion in revenue – sounds impressive, right? But peel back the layers, and you’ll find a story as old as time: smoke and mirrors. They’re betting big on AI, throwing $85 billion into the black hole of technological development.

This is the same playbook used in countless bubbles before – the dot-com bust, the 2008 housing crisis, even Enron’s deceptive accounting. They hype a future that may never arrive, distracting from the present-day realities.

The human impact? We’re all collateral damage. Investors risk their savings on a company that could implode at any moment, just like those who fell for the tech boom of the late 1990s, or the subprime mortgage craze leading up to 2008. Meanwhile, Alphabet gets richer while the masses chase the next hot trend.

The lesson? Don’t be blinded by big numbers and flashy presentations. This isn’t about innovation; it’s about market dominance. Alphabet isn’t creating the future; it’s trying to buy it, and your money may just become part of the price.

The real story is not in their soaring profits, but the hidden risks:

• Capital Expenditures: The company’s massive spending ($85 billion) is not a sign of strength, but rather a gamble. It might pay off, but it could just as easily lead to debt and losses, like what happened during the 2008 crisis when many companies overextended themselves.
• AI Hype: Their leadership in AI is being heavily hyped, much like the dot-com boom hyped internet companies. Many tech companies claimed to be the next big thing without having a solid business model, ultimately leading to huge losses.
• Overvalued Stock?: With a P/E ratio of 20, their stock might already be inflated, leaving investors susceptible to significant losses. This kind of market irrationality fueled the dot-com bubble and eventually led to its collapse.

In short: Alphabet’s success is built on the same shaky foundations that brought down countless giants before them. Be warned.

Advice

Don’t chase hype; understand the risks. Diversify investments. Remember history repeats itself – often with painful results.

Source

https://www.reddit.com/r/wallstreetbets/comments/1m7jtf4/alphabet_q2_earnings/