Alphabet (GOOGL) is one of many top tech companies in the US that has greatly increased its capital expenditure (Capex) in recent years. As the recent surge of the artificial intelligence industry rages on, tech giants are dedicating millions in spending towards AI investments, including partnerships and building data centers. Alphabet has been a leader in this area, and Wall Street analysts/experts are becoming increasingly favorable of this development.

One analyst at Needham recently reiterated a Buy rating on Alphabet (GOOGL) stock, saying that the tech giant shouldn’t reduce its capital spending. Needham’s Laura Martin estimates that Google will self-fund 100% of its capital spending between 2025 and 2028 from its free cash flow (FCF). Hence, the Capital Spending would be coming from solid revenue, lessening fears of borrowing or big bond sales.

Additionally, the 4-star analyst also believes that monetization of Google’s global consumer data through enterprise cloud licensing fees and/or large-language model (LLM) annuity payments will diversify the company’s revenue streams away from advertising. It will help lower investor risks and expand GOOGL stock’s valuation multiple. “GOOGL is buying itself deeper moats as it increases CapX, because few other companies can keep up,” added Martin.

Furthermore, bulls are regaining ground surrounding Alphabet (GOOGL) stock on The Street. Alphabet stock (GOOGL) has received an update from the leading investment bank JP Morgan. With shares currently trading at $305, the global bank remains bullish on GOOGL’s prospects as it is offsetting AI spending by renting out AI infrastructure.