Alphabet Obligates $454M Lease Guarantee and Faces Sub-25× Valuation
Alphabet guarantees rent payments under a 15-year lease at Hut 8’s River Bend HPC data centre, obligating it to cover $454 million annually at 99% margins. The Magnificent Seven group, including Alphabet, now trades below 25× forward earnings after its correlation with the equal-weighted S&P 500 turned negative.
1. Lease Guarantee Details
Alphabet guarantees rent payments under a 15-year lease at Hut 8’s River Bend high-performance computing data centre, obligating roughly $454 million annually at 99% margins. This commitment secures AI infrastructure capacity while extending Alphabet’s infrastructure spending over the next 15 years.
2. Valuation Reset and Market Correlation
The Magnificent Seven, including Alphabet, now trade below 25× estimated forward earnings, down from nearly 33× last October, as their correlation with the equal-weighted S&P 500 index turned negative. This valuation reset and decoupling from broad market movements could signal a rotation back into Big Tech names if AI spending expectations remain intact.