Google's AI Financing Fears Overblown? Smart Money Is Buying | Smart Money Option
$Alphabet-C (GOOG.US)$ $Alphabet-A (GOOGL.US)$ shares fell nearly 3% on Tuesday, making it one of the worst-performing mega-cap technology stocks of the day. Investors reacted negatively to the company's plan to raise $80 billion to expand AI infrastructure, citing concerns over potential shareholder dilution and rising AI-related capital expenditures.
However, while the stock was under pressure, the options market revealed a notable institutional trade.
According to the data, a large investor sold 8,930 contracts of the September 18, 2026 $360 put option at a premium of $22 per contract, representing approximately $19.65 million in premium collected. The trade was marked as Opening, while prior open interest stood at just 435 contracts, indicating a newly established institutional position.
This is a classic cash-secured put strategy.
After collecting the $22 premium, the investor's effective purchase price falls to $338 per share. Based on Google's stock price of approximately $366 at the time of the trade, the position provides roughly an 8% downside cushion.
In other words, the institution is willing to accumulate a significant amount of Google stock at around $338 over the coming months.
Importantly, market concerns surrounding the financing plan may be overstated.
Alphabet's $80 billion capital raise consists of a $30 billion public offering, a $40 billion at-the-market (ATM) program, and a $10 billion private placement to $Berkshire Hathaway-B (BRK.B.US)$ . Of the $30 billion public offering, only $15 billion consists of common stock, while the remaining $15 billion is issued as mandatory convertible preferred shares. Meanwhile, the $40 billion ATM program is expected to be executed gradually rather than through an immediate issuance.
Based on Alphabet's current market capitalization of approximately $4.5 trillion, even if the full $80 billion ultimately converts into common equity, the theoretical dilution would amount to only about 1.8%. Notably, the stock's decline on Tuesday exceeded that level.
The timing of the trade is particularly noteworthy.
The large put sale occurred on the same day Alphabet announced its financing plan, when investor sentiment was arguably at its most pessimistic. By collecting nearly $20 million in premium while simultaneously locking in a future purchase price, the institution appears more focused on the long-term returns from Alphabet's AI investments than on near-term dilution concerns.
In fact, Alphabet expects capital expenditures to reach $180 billion to $190 billion in 2026, with spending projected to increase further in 2027. The investments are primarily targeted toward AI data centers, computing infrastructure, and cloud expansion. Management has stated that AI-related demand currently exceeds available computing capacity.
For investors, the value of this trade does not necessarily lie in whether the institution is ultimately right or wrong. Rather, it provides a clear reference point: $338 per share.
While the market is selling on concerns over financing and AI spending, institutional capital is using the pullback to establish exposure and is willing to take ownership of shares near $338. For investors who share a long-term bullish view on Alphabet's position in the AI era, pullbacks driven by short-term sentiment may deserve closer attention.
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Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period. Certain complex option strategies carry additional risk, including potential losses that may exceed the original investment amount. If applicable, supporting documentation for any claims will be furnished upon request.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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