I Keep Buying Alphabet Hand Over Fist Becuase The Skeptics Are Wrong
Every bear who called Google Search a dead business walking has watched the revenue numbers move in the opposite direction, and the reasons behind that gap explain why one investor keeps buying more shares.
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I keep adding to my position in Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) because the loudest bear case, that AI would gut Google Search and hollow out the ad engine, keeps getting louder while the numbers keep going the other way. The skeptics said generative AI would strip clicks out of the funnel. Instead, AI is actively boosting the advertising business, and my cost basis has been rising alongside the buy button.
Core Thesis: A Cash Machine That Owns the AI Stack
What pulls me back is simple. Google owns the search index, the browser, the mobile OS, the video platform, the cloud, and now a frontier model people actually use. In Q2 FY2026, Google Search & other revenue grew 17% to $63.27B and YouTube ads climbed 13% to $11.06B. That is the “dying” ad business the skeptics warned me about. CEO Sundar Pichai told shareholders that “AI features are driving Search query growth”, and the segment numbers back him up.
Three Receipts I Keep Coming Back To
First, the growth is broadening across segments. Alphabet just posted its 12th straight quarter of double-digit revenue growth and its 11th consecutive EPS beat, with Q2 EPS of $9.11 against a $3.0427 consensus. FY2025 revenue crossed $400B for the first time on $73.27B of free cash flow.
Second, Google Cloud is finally the growth engine bears said it would never become. Q2 revenue rose 82% to $24.77B, and the cloud backlog nearly doubled to over $460 billion in Q1. Nearly 90% of the Fortune 100 now use Gemini Enterprise, and the Gemini App has 950M monthly active users.
Third, the balance sheet is a fortress. Debt-to-equity of 0.143, interest coverage of 175.5x, ROE of 35.7%, and ROIC of 29.6%. At a trailing P/E of 15 on a business compounding earnings this fast, I am paying a market multiple for above-market returns.
Why GOOGL Over Microsoft or Meta
Microsoft (NASDAQ:MSFT) gets the AI-cloud headlines, but Alphabet’s cloud growth of 82% YoY is running faster than Azure’s disclosed pace, and I get it for a cheaper earnings multiple than Microsoft carries. Meta Platforms (NASDAQ:META) is a fine ad business, but it does not own a hyperscale cloud, a mobile OS, YouTube, or Waymo, which just passed 500,000 fully autonomous rides per week. Meta also carries no meaningful capital-return dividend, while GOOGL just raised its payout 5% to $0.22 per share, a small yield today but a policy signal that matters over a retirement horizon.
Real Risk: The CapEx Bill Is Substantial
I am not waving this away. Alphabet guided 2026 CapEx to $175B-$185B, which pushed Q2 free cash flow to negative $5.86B. Long-term debt roughly doubled from $46.5B to $98.2B, and the buyback was suspended in Q2 2026. If the AI infrastructure spend does not earn its cost of capital, the compounding story slows.
Here is why it has not changed my thesis. That capex is funding the same demand curve producing $460B in cloud backlog and 22 billion API tokens per minute. Operating margin still expanded to 34% while spending doubled. That is a company earning the right to invest.
Forward Conviction
The stock is up 37.47% over the past year and 772.92% over the past decade, and I still see a search-plus-cloud-plus-AI compounder trading at a market P/E while the skeptics wait for a disruption story the segment data has already refuted. My conviction holds because Alphabet is being paid to win the argument.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
