Buy Alphabet for The Limted Downside Floor if The Coiled Spring Asymmetry Doesn’t Pique Your Interest
Alphabet stock sank 16% in a month, and one investor keeps buying every dip. Two scenarios, one of them involving a $175 billion spending binge, explain why he thinks the downside is already priced in.
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My Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) position increased again last week, and I expect to buy more before the next dividend comes. Every dip sends me back to buying, and the past month gave me plenty of them. Shares fell 16.61% over one month and 11.07% in the week after the Q3 earnings report, ending November 4 at $288.93.
My reason for buying is simple: Alphabet gives me two ways to win, and if its AI strategy pays off, I own a coiled spring. If AI disappoints, I still own one of the most profitable businesses in the world at a price that already assumes trouble. I want that asymmetry in a retirement portfolio.
A Floor Built on Earnings and a Fortress Balance Sheet
At a P/E of 13, Alphabet’s earnings yield works out to 7.77%. Q3 GAAP EPS came in at $2.12 against a $2.97 consensus, missing expectations. A $8.7 billion loss on equity securities explains the gap, since it cut diluted EPS by $0.55. Once I set that aside, operating income rose 29.93% to $40.58 billion. Revenue increased 24.65% to $127.58 billion, which made it the 13th consecutive quarter of double-digit growth.
The balance sheet holds that floor in place. Debt-to-equity sits at 0.143, net debt to EBITDA at 0.19, and interest coverage at 175.5x. Return on equity runs at 35.70%. Earlier this year Alphabet raised its quarterly dividend 5% to $0.22, and the next payment comes December 14, 2026.
Google Cloud Shows the Spring Already Uncoiling
Google Cloud revenue rose 103% to $30.71 billion. Its operating income climbed to $11.12 billion from $3.59 billion a year earlier. The Cloud backlog exceeded $460 billion as of Q1. Gemini reached 1 billion users, and first-party model APIs now handle nearly 32 billion tokens per minute. Search, which the bears expected AI to hollow out, keeps growing. The CEO said “our year-over-year query growth rate is the highest it’s been in the last five years.”
Why My Money Skips Microsoft, Amazon and Meta
With Microsoft (NASDAQ:MSFT) trading at a P/E of 31, Azure increased 48%. Amazon (NASDAQ:AMZN) trades at 37 times earnings, and AWS increased 39%. Meta Platforms (NASDAQ:META) trades at 23 times earnings, but it took a $9.89 billion litigation charge, and its operating margin fell to 20% from 40%. With Alphabet, I get the fastest-growing cloud of the group at the lowest multiple.
Risk That Could Actually Hurt This Position
The spending scares me. Q3 capex reached $51.36 billion, up 114.4%, and free cash flow fell to negative $9.07 billion. Management guided 2026 capex to $175 billion to $185 billion. Alphabet funded the spending by issuing notes for $28.7 billion in net proceeds and selling 12 million Class A and 24 million Class C shares through its at-the-market program. Another $27.6 billion remains available, so the dilution comes straight out of my ownership stake.
That risk is worth taking because operating cash flow still reached $42.29 billion in the quarter, and the spending goes toward a cloud business that already makes real profit against a deep backlog.
What Keeps My Buy Button Active
Each dip lets me buy a faster-growing AI business at a lower earnings multiple than its rivals, with the balance sheet acting as my safety net. If Alphabet keeps that combination intact, I’ll keep adding shares.
Contact [email protected] for any questions or corrections.
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.
