Alphabet (NASDAQ:GOOGL, GOOG) stock still looks expensive at its current price of about $2,755.

The GOOGL stock price is only slightly higher than it was three months ago, but look under the hood.

The growth of the cloud market remains the envy of the world.

Alphabet continues to grow revenues by 40% per year, at scale. Operating margins in the last quarter were 32%. Google Cloud grew 44% year-over-year.

But Google isn’t stealing this market. Its cloud market share remains stuck at about 10%. That’s 10 points behind Microsoft (NASDAQ:MSFT), which is even further behind Amazon.Com (NASDAQ:AMZN).

Google is also having to go to extraordinary lengths to keep up. This is not a bad thing.

A Closer Look at GOOGL Stock

Despite the latest hiccup in tech stock prices, the Cloud Czars are spending as never before.

Alphabet alone had capital spending of $6.8 billion in the September quarter, 26% ahead of a year earlier. Note that the spending isn’t rising nearly as fast as revenue.

Alphabet is doing more than just building data centers. Under former Oracle (NASDAQ:ORCL) executive Thomas Kurian, it’s literally buying customers.

Investments in companies like CME Group (NYSE:CME) and ADT (NYSE:ADT) come with long-term contracts to use Google Cloud. This could provide a double payoff for GOOGL stock.

Of course, these deals bring more revenue to Google Cloud. Alphabet could also make big money if its favored customers do well.

CME Group stock is up 17% over the last year. Microsoft has also made investments in big customers like General Motors (NYSE:GM).

All the Cloud Czars are on capital spending binges. Meta Platforms (NASDAQ:FB) will nearly double its capital spending this year, to as much as $34 billion.

Microsoft’s capital budget could rise to $24 billion this year. Amazon spent $32 billion in just the first three quarters of 2021.

The New Capital Model

Not all that money is going into data centers. Amazon is building warehouses and delivery infrastructure. Apple (NASDAQ:AAPL) is building manufacturing capacity. Meta is writing software.

The point is that cloud doesn’t just dominate global market cap, it also dominates capital spending markets.

The rise of the Cloud Czars has brought us a new capital model.

AT&T (NYSE:T), General Motors and Exxon Mobil (NYSE:XOM) all used debt to fuel their spending. The Cloud Czars are using cash flow, and they can’t spend their cash fast enough.

Despite its huge investments, Google had $142 billion in cash and short-term securities on its books at the end of September. Long-term debt was $25.7 billion, including capitalized leases. Google could expunge that debt tomorrow with a check.

Google’s capital spending is sustainable and its benefits flow straight to the bottom line. Czars aren’t troubled by rising interest rates.

Apple had $62 billion of cash and investments on its books in September. Microsoft had $130 billion, Amazon had $79 billion and Meta $58 billion.

While the market caps of the Czars are extreme, meanwhile, the price-to-earnings ratios aren’t. Google’s PE is just 26.5 and Meta’s was 23. Both are lower than the average S&P stock.

The Bottom Line

Technology didn’t just bring profits. It also created a new economic model and a new way of looking at corporate balance sheets.

You can go broke buying debt, even cheap debt. Handing money to shareholders, in the form of stock buybacks or dividends, is also a form of slow liquidation.

This contradicts the old conventional wisdom, but the economics of technology is now proven to work.

Forget dividends. Forget buybacks. Look at how companies are deploying cash. Look at what they’re buying today and its immediate financial return. That’s where you want your money.

On the date of publication, Dana Blankenhorn held long positions in MSFT, AAPL and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.