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**TL;DR:** Market wiped $200B off GOOGL in 48 hours because a model is late and some engineers changed badges — one day after Buffett revealed he personally built a $31B stake and wrote a $10B check directly funding the capex everyone fears. Meanwhile META gained $125B on a leaked memo about maybe selling leftover compute someday. Google's actual cloud: $20B/quarter, +63%, record margins, $462B backlog, turning away customers because demand exceeds supply. Earnings Wednesday at 25x forward with expectations conveniently reset. The market sold the machine and bought the memo.
Wall Street has spent July pricing Alphabet on personnel files and Meta on a press leak. Wednesday's earnings report will reveal which company has been mispriced.
The whiplash was cinematic. On July 15, Warren Buffett told CNBC that he — not successor Greg Abel — personally initiated Berkshire's Alphabet position, now worth roughly $31 billion, calling his failure to buy sooner a mistake and saying the company is more likely to succeed than 90% to 95% of Wall Street's picks. Shares rose nearly 4% to near an all-time high. One day later, Bloomberg reported Google is months behind schedule on Gemini 3.5 Pro, its flagship AI model, with coding performance the primary shortfall. Alphabet closed down 4.4%, erasing $200 billion in market capitalization, and the slide continued July 17, dragging shares toward $348. From record high to $348 in 48 hours, on zero change to revenue.
The report compounded weeks of unease over departures: Gemini co-leader Noam Shazeer returned to OpenAI, Nobel laureate John Jumper left DeepMind for Anthropic, and two more researchers — Gemini coding lead Jonas Adler and pretraining specialist Alexander Pritzel — followed. Yet the practical impact of those exits lands in 2027, not 2026, since 3.5 Pro was developed largely before they departed. The market sold this quarter on next year's org chart.
Contrast the treatment Meta received two weeks earlier. Shares closed up nearly 9% — roughly $125 billion in added market value in a single session — on a report that the company is building a cloud business to sell its excess AI computing power. Meta has not formally announced anything; the report cites unnamed sources, and the underlying premise, as Mr. Zuckerberg himself framed it, is that the company may have overbuilt relative to its own needs.
Consider the asymmetry. Meta's cloud thesis is surplus capacity in search of customers, entering a market dominated by Amazon, Microsoft, Google and CoreWeave, with no enterprise sales organization and margins that Wall Street concedes will run below its advertising business. Alphabet's cloud reality is the inverse: Google Cloud revenue accelerated to $20 billion in the first quarter, up 63% — the fastest growth among major providers — with operating margin expanding to a record 32.9% and backlog nearly doubling sequentially to a record $462 billion. Management has guided that just over half of that backlog converts to revenue within 24 months. The delayed model canceled none of it.
Nor is Alphabet's constraint excess compute. It is the opposite. Shares rose Monday on a report that Google is etching Gemini directly onto next-generation silicon — a project targeting 6 to 10 times better power efficiency per token, built to solve compute shortages that currently force Google Cloud to turn down external deals. A company declining revenue for want of capacity does not have a demand problem. Meanwhile the chip business is becoming its own franchise: Alphabet has begun selling custom TPUs to third-party customers and struck an agreement with Anthropic and Broadcom to supply multiple gigawatts of TPU capacity.
Return to Omaha, because the detail everyone missed is the best one. Berkshire's position was built in three tranches — roughly $4.3 billion in late 2025, $11.5 billion more early this year, and in June a $10 billion private placement, buying shares directly from Alphabet to fund the AI build-out. The capital expenditure that terrifies the market is the same capital expenditure Mr. Buffett is personally financing. He is not known for trading on model benchmarks.
The frontier itself argues against paying for benchmarks. Chinese labs have repeatedly compressed the state of the art within weeks through distillation and efficiency gains, which suggests the durable contest is cost per token and distribution — not leaderboard position. On that field, Alphabet controls every layer: silicon, data centers, models, and roughly three billion users. AI subscription revenue, the object of so much hand-wringing, is a footnote next to the cloud and advertising engines.
The bear case is capital intensity, and it is not trivial. Capital expenditure guidance stands at $180 billion to $190 billion, first-quarter free cash flow fell about 47% year over year, and share buybacks have been halted. The backlog carries customer concentration risk from Anthropic, and cloud growth decelerating below roughly 55% would raise questions about conversion pace and capex returns.
Which brings us to Wednesday. Alphabet reports July 22 after the close, with shares well below their $408 peak, consensus calling for EPS of $2.86 to $2.95 on revenue of $116.8 billion to $120.2 billion, at 25 times forward earnings — a discount to peers. The Gemini delay conveniently reset expectations into the print.
The market, in short, has been trading Alphabet's badge count and Meta's memo. Wednesday it gets audited financials. Historically, the machine wins.
At the end of the day: calls.
This is not financial advice. The author is highly regarded and drives his own short bus.
Position: GOOGL 380C 7/24, many contracts.