Alphabet (Google) shares have been moving higher amid a broadly risk-on tone in equity markets, and the company is reinforcing that momentum by doubling down on the infrastructure required to power the AI boom. It announced plans to invest roughly $1.5 billion in Alabama over the next two years to expand a data center campus. The expansion underscores the massive computing demands behind the current generative-AI arms race, as companies compete to build more powerful models and attract users. Notably, new AI systems across the industry are reportedly becoming more expensive to run, which only reinforces the importance of scale, operational efficiency, and access to computing infrastructure. Against this backdrop, Alphabet's stock is up solidly on the year as investors continue to bet on the company's positioning in the evolving AI landscape.
The Bull Case: Expansion Without Over-Leveraging
The core bullish thesis is that Alphabet is achieving aggressive expansion without taking on reckless leverage. There was widespread concern about the company's enormous capital expenditure—on the order of $180 billion to $190 billion in CapEx spending—until you account for the fact that Alphabet carries a cloud backlog of roughly $460 billion. Viewed against that backlog, the spending is not speculative; it is investment that is genuinely needed to fulfill demand already on the books.
Confidence in the strategy is further evidenced by the capital markets' response. When Alphabet went to the markets seeking $85 billion in funding, the offering was oversubscribed. In other words, the broader trading and investment community believes in what the company is doing and is willing to fund it. The narrative is one of a "tortoise and the hare" competitor: Alphabet is not always the fastest or the first to move, but it consistently seems to come out winning once it commits to something. By borrowing the right amount of money—not too much, avoiding becoming over-leveraged—the company has positioned itself well for the future. Strategic partnerships reinforce this trajectory, including deals routing Siri through Gemini, and arrangements involving Anthropic and OpenAI. The summary judgment is that Alphabet may not execute as flashily or at the same pace as some rivals, but it tends to do things correctly.
Reinforcing the Bull Case: Growth, Monetization, and Diversification
Recent earnings data substantiates the optimism. Cloud growth ran at a 63% rate last quarter, outpacing competitors in the space. Roughly 75% of Alphabet's customers are already using AI through its products, meaning the company already has the relevant eyeballs on its platform. It is also beginning to monetize AI search directly: when you run a regular Google search, you now encounter "AI mode," reflecting the integration of Gemini into products the company already operates.
A key competitive advantage lies in Alphabet's tensor processing units (TPUs). These custom chips reduced Gemini's serving cost by 78% in 2025, diversifying the company's hardware needs as it scales out its AI build-out and lowering the cost of delivering AI at scale.
One concern explains why the stock is trading roughly 9% off its recent highs: the plan to raise $85 billion to help pay for the ongoing AI infrastructure build-out. This forces investors to confront a central question.
Question: Is the AI infrastructure build-out going to be monetizable? The answer offered is affirmative. Looking across Alphabet's revenue-generating segments—advertising from search, YouTube advertising, the cost savings derived from TPUs, and Waymo—the company is monetizing on multiple fronts. Waymo, in particular, is still outpacing what Tesla has achieved in autonomous driving by quite a bit, so Alphabet leads in that space as well. Practically everything appears to be going right for the company as it works through the CapEx spend, which remains the single biggest concern for investors going forward. Crucially, the last several earnings reports have featured the company blowing out estimates and raising guidance on a quarter-by-quarter basis.
The Bullish Trade: A Customized Four-Legged Stock Replacement Strategy
The bullish example trade is a more unusual construction—a combination of strategies designed to lower cost and create opportunities for ongoing trade management. The central principle is calendar awareness: when trading options, you must always understand where you are on the calendar. With summer trading historically marked by low implied volatility, the trade is built around a stock replacement strategy. Rather than buying the stock outright, you buy a longer-dated, in-the-money call.
The structure, assembled as a custom four-legged spread, works as follows:
- The stock replacement leg: Go out to the September 18th monthly options—about 95 days to expiration—and buy the 365 strike call, which sits roughly $6 in the money. This call has a high delta and reacts much like a share of stock, effectively replicating close to one share. Because the option is 95 days out, it carries very little time decay.
- The short call leg: Against that, in the June 18th monthly options—expiring in just three days—sell the 380 strike call. This creates a bullish $15-wide call diagonal with substantial duration on the long side. It functions like a covered call, except a long-dated option stands in for the stock. The most profitability comes if the stock moves at or near the 380 strike.
- The financing leg: To help reduce the overall cost, sell the June 18th 360 put and buy the June 18th 350 put—a short $10-wide put vertical—using the credit to finance the trade.
As a package, the trade was entered at roughly $27–$28 of debit and is now trading near $29. Accounting for the $10-wide short put vertical (which adds about $1,000 of risk), the total risk on the position is approximately $3,800. The debit paid is itself part of the risk.
On the risk profile, the position begins to lose money below about 365 to the downside, with the maximum loss of roughly $3,800 reached all the way down around 330 or 320. There is also an upside break-even around the 410 level, reflecting that you are paying about $28 for a $15-wide bullish call diagonal. The ideal scenario is for the stock to grind higher or simply stay around its current level near 371, perhaps drifting up toward 380. If it remains below 380, the short 380 call expires worthless and the short put vertical expires worthless, leaving you still long the 365 September call.
From there, the trade can be actively managed each week: keep selling out-of-the-money short put verticals to collect credits, and sell another call based on where the stock is trading—perhaps the 390 or 400 call—going out a week or two and collecting additional credits. Each adjustment lowers the break-evens, reduces the risk in the trade, and increases potential profitability. Because the long September option decays slowly while the short-term vertical and short-term call (with only three days left) carry very high theta, the position generates a daily theta of more than $80 per day. The trade essentially involves buying time after the summer—September options are post-Labor Day—while selling summer options against that duration to harvest theta throughout the summer. The caveats: this is a bullish posture, and because you are paying more than the width of the strike, you must remain cognizant of a rally up through the 380 strike, and you carry assignment risk on the short 380 call going into expiration over the next three days. It is admittedly tricky and complex, but it collects a lot of theta.
The Bearish Trade: An Unbalanced Put Butterfly
The bearish example takes a more direct approach with shorter duration. Using the July 2nd weekly option series—17 days to expiration—the structure is an unbalanced put butterfly to the downside, designed to offset some of the cost of a bearish position:
- Buy one of the 370 strike puts (essentially at the money).
- Sell two of the 355 strike puts—the level where you want the stock to land.
- Buy one of the 350 strike puts.
Decomposed, this is a $15-wide bearish put vertical (370/355) with a $5-wide put vertical (355/350) sold against it to offset cost. The trade was entered for roughly a $460 debit and is probably trading closer to $430 now, since the stock has moved higher and is hitting intraday highs. The debit paid is the risk, but the position can expand in price fairly rapidly.
The break-even, paying a $460 debit, sits just above 365 to the downside. On a percentage basis, you don't need a large move to get into profitability on this trade.
The key feature of the unbalanced butterfly is that it is directional and does not collapse the way a standard butterfly does past its peak. Because it is structured unevenly—$15 wide on one side, $5 wide on the other—the profit graph shows a flat line that stays positive rather than falling back to a loss beyond the body. You would prefer the stock to land right at 355, but if it goes to 350 or lower, you remain profitable. This contrasts with the bullish trade: the bearish position can largely be left alone, whereas the bullish stock replacement position has to be defended if the stock pushes through 380.
Two Mirror-Image Approaches
The two trades represent opposite postures with a shared logic. The bearish trader would rather see the stock reach the target strike but does not strictly need it to. The bullish trader would rather see the stock reach the strike and then stay near it until an adjustment can be made. One side is built to profit from a downside drift, the other from a steady grind higher with active theta collection—two distinct ways of expressing a view on the same name while managing risk through layered, financed option structures.