Alphabet

Alphabet owns Google. Google Search and YouTube sell advertising. This is most of Alphabet's profit today.

Google Cloud rents computing power and AI tools to other companies, for a fee. Alphabet also owns Waymo, a self-driving car company, and other early-stage projects.

The market prices Alphabet at a discount for two reasons. It fears AI chatbots will pull clicks away from Google Search. It also fears antitrust rulings could force costly changes to its ad business. Heavy AI infrastructure spending adds to the worry, since investors are not yet sure it will earn a good return.

Alphabet now also pays for this spending with new debt and new shares. For the gap to close, Google Cloud must keep growing fast. Search ad revenue must also keep growing even as AI-generated answers appear next to results. A US judge ruled in September 2026 that Google will not have to sell its ad exchange or ad server, only follow new auction rules.

This removes the risk of a forced breakup in the US, but Google said it will appeal the liability ruling. In the EU, the Commission still says that only a sale of part of the ad business can fix the problem, and it fined Google under the Digital Markets Act in July 2026. Alphabet will report Q3 2026 earnings on October 28, 2026. That report will show whether Cloud growth and Search ad growth both continue at their current pace.

If both trends hold through early 2027, and the antitrust remedies do not cut ad revenue much, the discount can close over the next two to four quarters.

1. Oct 28, 2026Pending

   Q3 2026 results: Cloud growth, Search ads and capexGoogle Cloud growth near the Q2 pace of 82% and continued Search ad growth pass; a sharp Cloud slowdown or falling Search revenue fails.
2. Q4 2026 · est.Due this quarter

   Final judgment and appeals in the US ad tech caseA final judgment that keeps the no-divestiture remedy, with no government appeal that asks again for a sale of AdX or DFP, passes; a government appeal that asks for a forced sale fails.
3. Dec 2026 · est.Pending

   Appeals court hearing in the US search caseA ruling that keeps the 2025 remedies or narrows them, with default-search payments still allowed, passes; a ruling that bans those payments fails.
4. Feb 2027 · est.Pending

   Q4 2026 results and 2027 capital spending planCloud and Search growth that hold into early 2027 with capex that cash flow can mostly fund passes; a slowdown with still higher capex and more share issuance fails.

Every passed and failed checkpoint across all picks

Alphabet has more cash than debt, but it now uses outside capital to pay for its AI build-out. The reason is spending: capital expenditure of $80.6 billion in the first half of 2026 almost equaled operating cash flow of $84.9 billion. Read more

• Google Cloud's growth depends on continued heavy AI spending by Alphabet and by its customers. If AI infrastructure spending slows, Cloud growth can slow with it.
• AI chatbots and AI-generated answers could reduce the number of clicks on search ads over time. This effect is hard to measure today, since search ad revenue is still growing.
• Alphabet's capital spending is now about equal to its operating cash flow. It pays for the rest with new notes and new shares. If the AI spending does not earn a good return, the new shares dilute owners for no gain.
• Antitrust cases continue on many fronts. Google will appeal the US ad tech ruling, and the US search case is on appeal, where the government asks for a ban on default-search payments. The EU can still order a sale of part of the ad business, and it fined Google 890 million euros under the Digital Markets Act in July 2026. Publishers also seek more than $3.2 billion in damages in New York.

• October 7, 2026A Finnish authority ordered Google to stop preparation work at two data center sites, in Muhos and Kajaani, until environmental assessments are done. Google said it will obey the order.
• October 6, 2026Google and Constellation Energy signed a 20-year agreement for 890 megawatts of new nuclear capacity on the PJM grid, from uprates at 11 existing reactors. The first uprate is due by 2028, and all of it by the end of 2032. A separate 15-year agreement covers 2,700 megawatts of existing Constellation generation. Constellation will also use Google Cloud and Gemini Enterprise in its operations.
• October 2, 2026Google and the US government sent a joint draft of the final judgment in the ad tech case to the judge. They still disagree on some terms, such as the deadlines. An appeal can start only after the judge enters the final judgment.