Subject: Re: Google cloud contributes to IV10/price
well argued bear case:
google is becoming capital heavy w/cloud+AI buildout.
quality of earnings unambiguous worse than decade ago..

"...today. Google made net income of roughly $100b in 2024. FCF was ~$73b. When you remove stock-based compensation of $23b, the economic profits of the business were $50b.
This is half of what they are showing in accounting profits. In other words, this makes the business look much cheaper than it really is.
Again, this is the difference between depreciation charges tied to their capital investment, primarily in AI, versus the actual cash costs of capex in 2024. Why do we think it is so dangerous? It’s the same thing the oil companies did during the 2010s..."
smead, jul 2025