Great post. Think this is the correct analysis, of adjusting IC for non-productive assets. ROIC and incremental ROIC are coming out great. Why you think market is not paying attention to this?
Too many headline negatives to ignore. As I mentioned in the post EBIT margin to dip, negative FCF and another large step up in FY27 capex while you’ve hit delays on your own model developments is hard for the market to ignore when pure play AI operators are launching advanced models every month. Reportedly they reallocated compute away from DeepMind (their AI research lab) to clients in their cloud services segment and to simple AI search mode serving. This has angered DeepMind staff and some have left. News also reported there was an attempt to separate DeepMind from Alphabet.
So you basically have a compute shortage and competing internal priorities at play. Hence even more capex ahead. Like open AI they are finding you can’t do everything at once.
Great post. Think this is the correct analysis, of adjusting IC for non-productive assets. ROIC and incremental ROIC are coming out great. Why you think market is not paying attention to this?
Too many headline negatives to ignore. As I mentioned in the post EBIT margin to dip, negative FCF and another large step up in FY27 capex while you’ve hit delays on your own model developments is hard for the market to ignore when pure play AI operators are launching advanced models every month. Reportedly they reallocated compute away from DeepMind (their AI research lab) to clients in their cloud services segment and to simple AI search mode serving. This has angered DeepMind staff and some have left. News also reported there was an attempt to separate DeepMind from Alphabet.
So you basically have a compute shortage and competing internal priorities at play. Hence even more capex ahead. Like open AI they are finding you can’t do everything at once.