Alphabet has the best 'value' benchmark among the Magnificent 7 from earning multiple perspective. Accordingly to past financial reports since '22, Alphabet has been dedicating almost 100% of its free cash flow in share buyback.
The number is huge considering that its net income in '22 is $60B, $73.8B for '23, and trailing 4 quarters is at $87.7B. Share buyback amounted to $59B, $62B, and most recently $63B.
Alphabet uses free cash flow calculation as derived by [Cash flow from operation minus purchases in plants & equipment]. Numbers are compiled at http://gotrader.xyz/
Considering that we're now in the accelerated AI era since the launch of killer app ChatGPT back in late 22, there appears to be no slowing in share buyback. I was curious given the lackluster spending of AI equipment, since protecting Alphabet's moat (i.e., dominant position in search) is more important than share buyback.
Take a look at investing cash flow. It's hovering at some $20B annually. One can presume these expenses are inclusive of its custom TPU accelerators (all other major tech companies use Nvidia's). Why don't Alphabet spend more on TPU purchases?
What do you think?
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