The Market Is Souring On Alphabet: I’m Buying What They’re Missing
Wall Street is spooked by Alphabet's ballooning capital expenditures and suspended buybacks, but one investor sees something in the numbers that the crowd keeps overlooking.
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Every time the market murmurs about Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction), I buy more. It has been murmurs since early August, and I keep accumulating. Wall Street sees a company guiding to $175 billion to $185 billion in 2026 capital spending. I see a company that grew revenue 24.2% last quarter and trades at 15 times earnings. Shares closed at $343.92, well below the 52-week high of $408.10.
A Cash Machine Funding Its Next Cash Machine
Here is my thesis in one line. Alphabet takes cash from one of the most profitable ad businesses ever built and puts it into cloud and AI businesses that now grow faster than the ads do. Search brought in $63.27 billion in Q2, up 17%. That engine pays for everything else, and the rest of the company now carries more of its own weight.
Three Receipts Behind Every Purchase I Make
First, Google Cloud keeps speeding up. Q2 revenue reached $24.77 billion, up 82%. Growth ran 63% in Q1, 48% in Q4 2025 and 34% in Q3 2025. The backlog exceeded $460 billion as of Q1. When a business this large keeps accelerating, customers are signing faster than Alphabet can build.
Second, the results keep coming in on time. Q2 marked the 11th consecutive EPS beat and the 12th straight quarter of double-digit revenue growth. I set the headline EPS of $9.11 aside, because it includes a $99.03 billion unrealized gain. The core business still delivered: operating income rose 30.4% to $40.77 billion, and operating margin expanded to 34%.
Third, the company’s finances can carry the load. Debt-to-equity is 0.143, interest coverage at 175.5x, and cash at $55.91 billion. Management also raised the quarterly dividend 5% to $0.22. A yield of about 0.50% is small, but I value a company that raises its payout in the middle of a heavy build.
Why My Money Skips Microsoft and Meta
Microsoft (NASDAQ:MSFT) is the obvious alternative. It trades at 29 times earnings, and Azure grew 43% last quarter. With Alphabet I pay about half the multiple for cloud growth that runs nearly twice as fast.
Meta Platforms (NASDAQ:META) trades at 27 times earnings. Its Q2 EPS of $6.18 fell short of expectations by 14.42%, and operating margin shrank to 31% from 43%. Shawn O’Malley said on The Investor’s Podcast: “I’d be more excited to accumulate shares in Alphabet or Amazon with any incremental capital than Meta right now.”
Capex Risk I Refuse to Ignore
Spending is the real threat to this position. Q2 capex hit $44.92 billion, up 100.1%, and drove free cash flow to -$5.86 billion. Long-term debt rose from $46.5 billion to $98.2 billion. Alphabet also raised roughly $70 billion and suspended buybacks. If AI demand stalls, shareholders get diluted and end up paying for idle data centers.
I still hold my conviction because operating cash flow rose 40.8% to $39.07 billion in that same quarter, and the Cloud backlog shows signed demand behind the spending.
Why I Keep Buying From Here
The Gemini App now has 950 million monthly users. Nearly 90% of the Fortune 100 use Gemini Enterprise, and Gemini models process 22 billion API tokens per minute. The market sees a spending problem. I see a company building the infrastructure its competitors will pay to rent, and I will keep collecting shares while other investors wait for proof. The same expansion is raising a whole tier of suppliers behind the chipmakers, which is what we cataloged in a free report on seven AI infrastructure names.
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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.
