Observed Signal · May 1, 2026 · Options Trade Recommendation · Source: CNBC Investing · Impact: 4/5 · Sentiment: Positive
Alphabet Dominates AI; Mike Khouw’s Options Trade
CNBC Options Action writer Michael Khouw argues Alphabet is leading the AI revolution after a blowout quarter driven by surging Google Cloud and AI demand. Management raised full-year capital expenditure guidance to as much as $190 billion, which Khouw interprets as a signal Alphabet is investing for generational dominance in AI infrastructure and services — including demand for Gemini-powered offerings. Khouw outlines an advanced options strategy to profit: buy August $400 calls financed partly by selling a June 350/420 strangle (sell June 350 puts and June 420 calls). The piece frames the trade as modestly bullish while acknowledging capped upside from the short calls and the risk of assignment on sold puts.
Alphabet is a major platform whose strong earnings, accelerating Google Cloud/AI revenue and a raised $190B capex guidance materially affect AI infrastructure, cloud economics and the ad-tech/ad-revenue landscape.
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Key Takeaways & Evidence Grounding
- Alphabet reported a blowout quarter driven by surging Google Cloud and AI-related revenue.
- Alphabet raised full-year capital expenditure guidance to as much as $190 billion.
- Demand for Gemini-powered services and AI infrastructure is described as outpacing forecasts.
- Michael Khouw recommends an options strategy: buy August $400 calls and sell a June 350/420 strangle (sell June 350 puts and June 420 calls).
- Article published on 2026-05-01 and authored by Michael Khouw for CNBC.
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Alphabet's 160% Rally Underscores AI Stack Value
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Google I/O: Alphabet’s AI Moment for Wall Street
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Jim Cramer Names Alphabet Hyperscale Earnings Winner
CNBC’s Jim Cramer declared Alphabet the top performer among recent Big Tech earnings, saying the Google call was "extraordinary" and predicting the stock could move from $370 to $400. Cramer ranked Alphabet ahead of Amazon, Microsoft and Meta Platforms after Alphabet reported a strong first quarter that beat revenue and earnings expectations. The stock rallied more than 7% the day after the report to a record-close. The company showed momentum in AI initiatives, expanded capital expenditures and raised spending guidance, while Google Cloud growth accelerated — management cited a backlog that nearly doubled to $460 billion and included, for the first time, sales of its TPU chips. Cramer contrasted Alphabet’s cloud strength with peers such as Meta, whose stock fell after announcing higher capex.
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