Alphabet's Cash Machine: Why Now's the Time to Buy and How to Play It with Options

The tech world is buzzing with Alphabet's (GOOGL) Q1 2025 earnings, where the company smashed expectations with $19 billion in quarterly free cash flow (FCF) and a $75 billion trailing twelve months (TTM) FCF total. Yet, its market cap has dipped to $2.17 trillion, down 0.74% from a year ago. This creates a golden opportunity to buy one of the world's most dominant tech titans—if you know how to read the numbers and structure your bets. Let's break it down.

The FCF Yield: A Hidden Bargain

First, let's crunch the numbers. Alphabet's TTM FCF of $74.78 billion divided by its $2.17 trillion market cap gives an FCF yield of 3.44%. That might sound modest, but here's the kicker: Analysts project Next Twelve Months (NTM) FCF to hit $89.85 billion, boosting the NTM FCF yield to 4.14%. That's a 20% jump in cash generation in just one year—without a proportional rise in valuation.

Compare this to historical trends: Alphabet's FCF margins have held steady at ~21%, even as it pours billions into AI infrastructure. Meanwhile, its market cap has lagged behind its FCF growth. shows FCF surging while market cap growth has stalled since late 2024. This disconnect is your edge.

Why the Dip? And Why It's a Buying Signal

The recent dip isn't due to weak fundamentals. Alphabet's Q1 FCF margin (21%) outpaced its TTM average (20.8%) despite a 47.5% capex spike on AI. Investors may be overreacting to broader tech sector volatility or fears of economic slowdowns. But remember: Alphabet's core Google business—generating $90 billion in revenue in Q1 alone—is a cash-gushing monopoly. Its cloud division and “Other Bets” (Waymo, Verily) are scaling, not draining cash.

This is a “buy the dip” moment. At $178.53 per share, Alphabet is priced for stagnation, not the growth its FCF suggests. With a 23.3% compound annual growth rate in market cap since 2004, this company isn't backing down.

The Option Strategy: Play It Smart, Play It Safe

Now, let's talk tactics. If you're bullish but cautious, here's how to structure your play:

1. Buy the Stock and Sell Covered Calls:
2. Buy 100 shares at $178.53.

3. Sell out-of-the-money call options with a strike price of $190 (about 6.5% above current price). Collect premium income now, and if the stock rises past $190 by expiration, you'll be “called out” at a profit. If not, keep the premium and repeat.

4. Protective Put Strategy for Holders:

5. Already own Alphabet? Buy a put option with a strike at $170 to guard against a drop below that level. This costs a small premium but preserves gains if the stock holds up.

6. Long-Dated Calls for Aggressive Investors:

7. Buy LEAPS (long-term options) with a strike at $200, expiring in 2026. If Alphabet hits $200 by then (a 12% rise from current levels), you'll score huge gains. The time value here is worth the bet.

Final Call: Don't Miss the Train

Alphabet's FCF machine is firing on all cylinders. With AI investments set to pay off (think: self-driving cars, cloud dominance, and healthcare breakthroughs), this isn't just a cash cow—it's a future-proofed juggernaut. The market's hesitation is your gain.

Buy now, layer in options for safety and leverage, and let this cash flow powerhouse work for you. This is a once-in-a-cycle opportunity to own a $2 trillion company at a 4% FCF yield. Don't let it slip away!

Remember: Risk is always present, but with this kind of cash generation, the odds are stacked in your favor.

Data as of June 27, 2025. Past performance does not guarantee future results.