Alphabet Inc.
Owner of Google Search, YouTube, Android and Google Cloud, selling advertising, subscriptions and devices, and cloud compute and AI infrastructure.
- Rating
- Price
- $324.22
- Price target
- $340.00
- Implied return
- +5%
- Market value
- $3,965bn
- Next results
- Not on the calendar
Our view
Vishal Bhargava, CFA · updated Oct 23, 2026Demand is not in doubt: Search grew 17% in 2Q26 and Cloud 82% on a $514bn backlog. The question is what the demand costs. Capex of $200bn in FY26E and $265bn in FY27E takes D&A from $21.1bn to $75bn by FY28E and keeps free cash flow negative for two years, and consensus is not modelling the depreciation. On operating EPS the stock trades at 25.9x FY27E against a 21.0x five-year average, so the re-rating is in the price. The bear case is not a broken business, so we rate Hold rather than Sell.
What could prove us wrong
- Capex without return: D&A reaches 10.5% of sales by FY28E and a 100bp Cloud margin miss costs $2.60 a share; -$124 a share.
- Search displacement: AI answers cut monetised clicks and Search growth falls below 8% with paid clicks negative; -$60 a share.
- Multiple de-rating: a 10% Nasdaq drawdown costs about 12% on the 1.22 beta before any news; -$42 a share.
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