- Company name
- Alphabet
- Sector
- Internet search & cloud computing
- About
- 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.
- Thesis
- 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.
- Risks
- 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.
- Balance sheet
- Cash: $242.5B
Debt: $101.1B
Net cash: $141.4B
Ratings: Moody's Aa2 (stable outlook), S&P AA+ (stable outlook)
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. The cash figure includes $87.1 billion of equity securities, of which $80.0 billion are SpaceX shares that Alphabet cannot sell at this time. Without equity securities, cash and debt securities were about $155.4 billion. Debt is the face value of long-term debt, almost all fixed-rate senior unsecured notes at the parent. It does not include $18.0 billion of operating lease liabilities and $2.6 billion of finance lease liabilities. In the first half of 2026, Alphabet issued $51.8 billion of notes in US dollars and five other currencies. In June 2026, it raised $49.6 billion net from new common stock and mandatory convertible preferred stock. A new $40.0 billion at-the-market share program was not yet used at June 30. Alphabet bought back no shares in that half. Interest expense was only $1.8 billion in the half, and the $25.0 billion commercial paper program was unused. After June 30, Alphabet sold $25.0 billion of US dollar notes in August 2026 and 5.5 billion Australian dollars of notes. Off the balance sheet, Alphabet backs third-party data centers and power. The maximum future payments are $7.6 billion in guarantees and $43.8 billion in credit derivatives. The balance sheet can carry the AI program. But the new shares and preferred stock dilute owners, so the return on that spending matters more than before.
As of 2026-06-30.
- Checkpoints
- Oct 28, 2026: Q3 2026 results: Cloud growth, Search ads and capex. Pending. Watch: Google Cloud growth near the Q2 pace of 82% and continued Search ad growth pass; a sharp Cloud slowdown or falling Search revenue fails.
Q4 2026 (estimate): Final judgment and appeals in the US ad tech case. Pending. Watch: A 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.
Dec 2026 (estimate): Appeals court hearing in the US search case. Pending. Watch: A ruling that keeps the 2025 remedies or narrows them, with default-search payments still allowed, passes; a ruling that bans those payments fails.
Feb 2027 (estimate): Q4 2026 results and 2027 capital spending plan. Pending. Watch: Cloud 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.
- Recent events
- 2026-10-07: A 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.
2026-10-06: Google 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.
2026-10-02: Google 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.
2026-09-30: A federal judge in New York ruled that a class of about 5,000 publishers, USA Today and Daily Mail can seek more than $3.2 billion in damages from Google over its AdX ad exchange. The judge dismissed some other publisher claims. Google said it will defend the rest in court. The judge has not set a trial date.
2026-09-02: A US judge in Virginia ruled that Google does not have to sell its AdX ad exchange or its DFP ad server. For six years, AdX must bid into rival ad servers on equal terms, publishers can export their AdX bid data, and publishers that use DFP do not have to use AdX. A monitor will check compliance. Google said it will appeal the liability ruling.
2026-08-10: Alphabet sold $25.0 billion of US dollar notes in ten parts that mature from 2028 to 2066. On August 27, 2026, it also sold 5.5 billion Australian dollars of notes, its first in that currency.
2026-07-23: The European Commission fined Google 890 million euros under the Digital Markets Act. This is its first fine against Google under that law. 460 million euros is for favoring its own services in Search, and 430 million euros is for rules that stop apps from sending users to offers outside Google Play.
2026-07-22: Alphabet reported Q2 2026 results. Revenue grew 24% to $119.8 billion. Google Cloud revenue grew 82% to $24.8 billion. Search revenue grew 17% to $63.3 billion. Alphabet increased its 2026 capital spending plan to $195 billion to $205 billion, from $180 billion to $190 billion.
2025-09-02: A US court ruled on remedies in Google's search antitrust case. Google keeps Chrome and Android. Google must end exclusive default-search deals and share some search data with rivals.