Over the Last 4 Quarters, Google Parent Alphabet Dumped Its Stake in CrowdStrike and Piled Into This Supercharged Space Stock Instead

Alphabet has strategically reallocated capital within its $2.1 billion equities portfolio, divesting from cybersecurity firm CrowdStrike (CRWD) and significantly investing in satellite connectivity company AST SpaceMobile (ASTS). The move from CrowdStrike, a long-time holding that had seen over 700% growth since its IPO, is attributed to taking gains, the company's slowing revenue growth, disappointing guidance, $5.4 billion in outage-related charges, and Alphabet's acquisition of rival Wiz. Conversely, Alphabet initiated a substantial position in AST SpaceMobile, which is developing a space-based 5G network, aligning with Alphabet's strategic interest in expanding global internet access to boost its core services, despite ASTS's early stage, high valuation, and inherent execution risks.

Analysis

Alphabet has strategically reallocated capital from its $2.1 billion equities portfolio, divesting from cybersecurity firm CrowdStrike (CRWD) and initiating a significant position in satellite connectivity company AST SpaceMobile (ASTS). This move reflects a shift in investment focus, potentially driven by both profit-taking and long-term strategic alignment, with a mixed general sentiment and speculative tone.

The divestment from CrowdStrike, a long-held position with over 700% growth since its 2019 IPO, appears multifaceted. Drivers include taking gains, slowing revenue growth (~30% between fiscal 2024-2025), disappointing forward guidance, and growing losses from $5.4 billion in outage-related charges. CRWD's 140x forward earnings valuation and Alphabet's $32 billion acquisition of rival Wiz further support the exit.

Alphabet's new investment in AST SpaceMobile, an early-stage company building a space-based 5G network, aligns with its strategic interest in expanding global internet access. While ASTS generates minimal revenue, its stock surged over 234% this year to a $26 billion market cap, driven by the potential to launch 45-60 satellites by next year, supporting Alphabet's core business by increasing potential users.

Despite the strategic fit, AST SpaceMobile presents significant risks, including nascent revenue, high market valuation, and the need for numerous regulatory approvals (conditional FCC approval for 20 satellites). Competition from SpaceX and substantial execution challenges in deploying satellites further underscore the speculative nature of this investment, as reflected in the per-ticker sentiment for ASTS.

Key Decisions for Investors

• Investors should re-evaluate CrowdStrike (CRWD) positions, considering its 140x forward earnings, disappointing guidance, and the $5.4 billion in outage-related charges impacting profitability.
• Treat AST SpaceMobile (ASTS) as a highly speculative growth opportunity, weighing its potential for global connectivity against significant execution risks, regulatory hurdles, and current lack of substantial revenue.
• Monitor Alphabet's (GOOG/GOOGL) strategic investments for long-term alignment with core business growth, recognizing that individual portfolio reallocations may have limited immediate impact on the large-cap company's overall financials.