Alphabet Acquires Intersect for $4.75B to Secure Renewable Energy for AI Data Centers
GOOG•Alphabet agreed to acquire Intersect for $4.75B, securing renewable energy solutions co-located with its data centers to reduce AI power costs. This vertical integration follows Q3 Google Cloud revenue growth of 34% YoY to $15.2B and underpins its 64% YTD re-rating to a 23x EV/EBIT multiple.
1. AI Margin Trade Rewards Alphabet
In 2025, Alphabet emerged as a top performer within the so-called Mag7, driven by its AI “earner” status contrasted with peers classified as “spenders.” Investors have penalized companies with high capital expenditures and delayed returns while rewarding those converting AI investment into near-term profits. Alphabet reported gross margins of 59.2% in Q3, up from 57.8% a year earlier, reflecting the early monetization of Gemini integration across Search and YouTube. This margin expansion has underpinned its outperformance against the S&P 500, as the company delivered operating income growth of 28% year-over-year, demonstrating that its AI pivot is translating into sustainable profitability today rather than in distant horizons.
