I keep hitting the buy button on Alphabet (NASDAQ:GOOG | GOOG Price Prediction), and every quarter hands me a fresh reason to do it again. This is the position I plan to hold for the next decade, and the case gets stronger with each earnings report.
The reason is simple: Google is running the AI stack from silicon to search, and the numbers are showing up in the financials before they show up in the price.
The Compounding Machine I Keep Feeding
Start with Cloud. Google Cloud revenue grew 63% in Q1 FY2026 to $20.03B, and the backlog nearly doubled quarter over quarter to over $460 billion. That is contracted future revenue, already on the books. Search kept rolling with 19% growth and queries at all-time highs. YouTube ads posted $9.88B. Paid subscriptions across YouTube Premium and Google One reached 350 million.
The earnings pattern behind the price is what keeps me buying. Q1 FY2026 EPS came in at $5.11 against a $2.63 estimate, the fourth straight quarter of beating expectations.
Operating income grew 30% year over year to $39.70B, and operating margin expanded to 36.1%. Full-year FY2025 annual revenues exceeded $400 billion for the first time. Sundar Pichai summed up the tone: “2026 is off to a terrific start. Our AI investments and full stack approach are lighting up every part of the business.”
Why This One and Not the Obvious Alternatives
When people talk mega-cap AI, they reach first for Microsoft (NASDAQ:MSFT) or Amazon (NASDAQ:AMZN). I get the reflex. What keeps my capital going into Alphabet is the combination of price and pace. Alphabet trades at a forward P/E of 25 against TTM EPS of $13.1, with return on equity of 38.9%.
On the Cloud side, one investor podcast I follow put it plainly: “Google is significantly outgrowing Amazon in the cloud space because they made an early bet on courting AI companies.” Cloud growth at 63% year over year is doing that work in the numbers.
The analyst desk lines up behind it: 14 strong buys, 44 buys, 7 holds, zero sells, with a consensus target of $428.54. The stock currently sits 6% below its 52-week high after running 93.96% in the past year and 882.93% over the past ten years.
The Risk I Own With Open Eyes
The real risk is capital expenditure. Q1 CapEx more than doubled to $35.67B, up 107.44% year over year, and management guided $175B to $185B in CapEx for FY2026. Free cash flow fell 46.63% in the quarter. That is a real drawdown on the cash machine, and I think about it every time I add to the position.
The reason it has not changed my thesis: operating cash flow still grew 26.67% to $45.79B, shareholders equity sits at $478.75B, and Alphabet raised its quarterly dividend 5% to $0.22 per share during the heaviest investment period in its history. Google is spending because a $460 billion Cloud backlog is asking it to.
The Buy Button Stays Active
I own Alphabet because the moat, the growth engine, and the balance sheet all point the same direction, and I plan to still own it in July 2036 for the same reason I bought more of it this week.
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