Billionaire Money Manager Christopher Begg Bought Google at 15x Earnings. Here’s Why He Calls It the Best Business in the World
When two storm clouds hung over Alphabet, a Columbia-trained value investor saw a rare window to buy one of history's greatest businesses at a discount. Now a third cloud is forming, and the stakes are far higher than the first…
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Christopher Begg, co-founder and CEO of East Coast Asset Management and an adjunct professor of Security Analysis and Value Investing at Columbia Business School, has built his firm around a deceptively simple question: are the clouds hanging over a great business temporary or permanent? On the We Study Billionaires podcast episode “RWH070: Hunting For Hidden Treasures w/ Christopher Begg,” he laid out why he built a large position in Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) when the market briefly forgot what it owned.
Begg’s framework filters companies through three pillars: a widening moat with eight identifiable layers, secular tailwinds driving top-line growth, and operators with intelligent capital allocation. From there, he underwrites to a 15% rate of return over 10 years measured on free cash flow growth. Google cleared every filter while trading at roughly 15x earnings, a valuation compressed by two “clouds” that turned out to be temporary.
The Two Clouds That Cleared
The first cloud was existential: fear that generative AI would siphon search queries to OpenAI and Anthropic. The second was regulatory, the FTC antitrust overhang. As Begg described it, “We woke up one day and the cloud was gone” on the regulatory front, while the AI cloud dissipated as Google’s own stack proved dominant. On the AI question specifically, Begg said “Demis Hassabis, in what he’s built in DeepMind and in Google, is still in our perception the lead, really leading in AI.”
Begg frames Google through graph theory, arguing that as nodes and edges populate across a domain, “we start to see increasing returns to scale” rather than diminishing ones. The Q2 2026 numbers back that framing.
The Fundamentals Behind “Best Business in the World”
Alphabet’s Q2 2026 report, filed July 22, 2026, delivered EPS of $9.11 versus a $3.04 consensus, the 11th straight EPS beat. Revenue hit $119.80 billion, up 24.23% year over year, the 12th consecutive quarter of double-digit growth.
The scale story lives in the segments:
- Google Cloud: $24.77 billion, up 82%, accelerating from 34% growth in Q3 2025 to 48%, 63%, and now 82% over four quarters.
- Search & other: $63.27 billion, up 17%, with AI Overviews driving query growth rather than cannibalizing it.
- YouTube ads: $11.06 billion, up 13%, with 1.7 billion unique viewers watching FIFA World Cup 2026 content.
Operating margin expanded to 34%, up 2 percentage points. Sundar Pichai noted Gemini models now process 22 billion API tokens per minute and the Gemini App has 950 million monthly active users, with nearly 90% of the Fortune 100 using Gemini Enterprise.
The Valuation Then and Now
Google traded near 15x forward earnings in early 2023 during the ChatGPT panic. Since January 3, 2023, the stock has returned 269.7%, and it is up 69.53% over the past year. Yet the trailing P/E sits at 16, with a forward multiple of 23. Return on equity runs at 48.7% on a 54.8% net margin. Analyst consensus target sits at $428.12 with 58 buy ratings, 7 holds, and zero sells.
The New Cloud Forming
Begg’s framework demands intellectual honesty about the next cloud. Alphabet raised roughly $70 billion in combined equity and debt in Q2 to fund an AI buildout that pushed CapEx to $44.92 billion, up 100% year over year, driving free cash flow to negative $5.86 billion. The buyback was suspended, and 2026 CapEx guidance was raised to $180 billion to $190 billion.
That is the new cloud investors will underwrite: whether the AI infrastructure spend earns the ROIC Pichai says it will. Cloud backlog reached $462 billion in Q1 2026, and management said “Cloud revenue would have been higher if we were able to meet the demand.” If enterprise demand keeps outrunning capacity, the current cloud clears the same way the last two did. If it does not, Begg’s next annual letter will tell readers whether he thinks it was temporary or permanent.
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Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
