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First a note from Banyan Hill Research
Dear Reader,
In 1998, a 27-year-old Elon Musk set out to replace the U.S. dollar.
Then his plans fell apart.
First, his PayPal co-founders staged a coup and fired him.
Then, he spent decades building Tesla... SpaceX... xAI...
Amassing more wealth and power than any man in history.
Now he's come full circle.
And he's about to "reboot" the U.S. dollar, with the full blessing of the White House, Congress, and the U.S. Treasury.
If he's successful, this technology will be bigger than Tesla and SpaceX combined.
And for investors, it could be one of the most explosive opportunities of the decade.
Go here for the full story.
Regards,
Ian King
Chief Strategist, Strategic Fortunes
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What the Market Got Wrong
Hey there, bargain hunter.
Markets punish companies all the time for the wrong reasons. This week gave us three of those moments in a single afternoon. The question worth asking is not what the headlines said. It is whether the market's reaction matched the underlying reality of the business.
Short answer: in at least two of these cases, it did not.
Alphabet: Cloud Grew 82%. The Stock Fell 4%. Make It Make Sense.
Let's start with the strangest reaction of the night.
Alphabet reported Q2 revenue of $119.8 billion, up 24% year over year, beating consensus estimates of $116.93 billion. Google Cloud revenue surged 82% to $24.8 billion. Operating income rose 30% to $40.8 billion. Operating margin expanded two percentage points to 34%. Nearly 90% of the Fortune 100 are now using Gemini Enterprise. The Gemini app has 950 million monthly active users.
By almost any measure, this was a very strong quarter.
The stock fell more than 4% in after-hours trading. Why? Alphabet raised its full-year capital expenditure forecast to $195 billion to $205 billion, up from the prior range of $180 to $190 billion. That spooked investors who are already nervous about whether AI infrastructure spending will produce returns fast enough.
Here is where the Cheap Investor lens gets useful. The capex concern is real, but context matters enormously. Google Cloud operating income reached $8.8 billion in the quarter, up from $2.8 billion in the same period a year earlier. That is a tripling of cloud profitability in twelve months. The business is not just growing. It is producing dramatically more profit per dollar of revenue. That does not look like a company burning cash on infrastructure with nothing to show for it.
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