💼 Google Cloud and AI Infrastructure Expansion, The Borderline of Value Trap - 2026.06.19

Hello. It's Peanut. What are you all thinking while watching Google's stock flow.

💼 Cloud and AI Chip Expansion, Fundamental Check

Recently, an analysis suggested that Google Cloud is outperforming its competitors ^[1]. With a $462 billion backlog, the growth trend is noticeable, and while the current forward P/E (non-GAAP) of 25x is slightly higher than its 5-year average, there is an opinion that it can support valuation expansion if AI monetization backs it up ^[1].

Also, it is aggressively entering the AI chip race, challenging Nvidia's dominance ^[2]. It is trying to increase its own TPU demand by providing a $3.2 billion financial guarantee to the Lake Mariner data center project in New York ^[2]. This computing power is expected to be leased to Anthropic ^[2]. In addition, there is news that it plans to introduce 'Project Aura' XR glasses based on Android XR and Gemini in cooperation with Xreal later this year ^[3].

⚠️ Bearish Scenario Amidst Bullishness: Beware of Value Trap

But let's pause here and think for a moment. Is it really so? Recording a closing price of 367 (+1.48%) on the 18th, it is drawing market attention from a short to mid-term swing perspective, but I want to ask if the rosy narrative is fully verifiable.

Massive capital is being injected to expand cloud and AI infrastructure, but there is a risk that this $3.2 billion data center guarantee and surging CAPEX could lead to margin deterioration in the future. Considering the time lag until the massive $462 billion backlog is recognized as actual revenue, we must also keep in mind the possibility of a value trap due to the entrenchment of a high-cost structure.

Also, we need to carefully examine executive compensation structures and insider equity changes, such as CEO Sundar Pichai receiving 137 dividend-linked stock units.

Peanut sees that while the current AI ecosystem expansion momentum is positive from a fundamental perspective, strict vigilance is necessary when the massive infrastructure investment costs are fully reflected in the earnings. If the valuation burden increases, it might be a phase where a portion could be considered as a candidate for profit-taking trim.