GOOG — Alphabet Inc. (Google)

Search / AI / Cloud / YouTube / Advertising · NASDAQ · Mountain View, CA

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Our View: We Like It

The most dominant technology franchise in the world just crossed $400 billion in annual revenue. Google Cloud is growing 48%. YouTube brings in more money than Netflix. And the stock trades at 27x earnings — cheaper than most of its mega-cap peers. AI is making Search stronger, not weaker. The big question is whether $175–185 billion in planned infrastructure spending will pay off.

01

The Story

Steady Builder Consistent, profitable, dominant market position

You probably used Google today. You might have watched YouTube. You almost certainly checked Gmail or Maps. Alphabet is the company behind all of it — and it quietly became one of the most profitable businesses in human history.

Revenue just crossed $400 billion for the first time, with $132 billion in net profit. To put that in perspective, Alphabet made more money last year than the GDP of most countries. The core search advertising business keeps growing — up 17% in the most recent quarter — because AI features like Overviews and AI Mode are actually increasing engagement rather than cannibalizing it. Over 2 billion people use AI Overviews every month.

Beyond Search, the growth vectors are stacking up. Google Cloud is now a $70 billion+ annual run-rate business, growing 48% — faster than AWS or Azure on a percentage basis. YouTube crossed $60 billion in combined revenue, which is bigger than Netflix. The Gemini AI app has 750 million monthly users. And Alphabet has over 325 million people paying for subscriptions across its consumer products.

The main debate right now is the spending. Alphabet plans to invest $175–$185 billion in infrastructure this year — mostly AI compute and data centers. That's nearly double what they spent last year, and it's the second-largest single-year CapEx plan ever announced by any company. If AI demand keeps growing, this spending builds an enormous moat. If it doesn't, it weighs on profits. The stock dropped about 7% when this number was announced.

What's notable is the valuation. At ~27x trailing earnings, Alphabet is one of the cheapest quality stocks in big tech. That's less than Netflix, less than Spotify, less than most software companies. For a business this dominant, growing this fast, with this many moats — search, video, cloud, AI, autonomous vehicles through Waymo — the price seems reasonable.

02	The Numbers

Here's the data for those who want to dig in.

Stock Price

$318.95

Market Cap

~$3.7T

Cloud Run Rate

$70B+

Trailing P/E

~27x

Year	Revenue	Growth	Net Income	EPS
FY 2023	$307.4B	+9%	$73.8B	$5.80
FY 2024	$350.0B	+14%	$100.1B	$8.04
FY 2025	$402.8B	+15%	$132.2B	$10.81
Q4 2025	$113.8B	+18%	$34.5B	$2.82 (beat)

What the numbers tell us:

Revenue growth is accelerating. Full-year growth of 15% sped up to 18% in Q4. Earnings grew even faster — up 32% for the year. That's unusual for a company this size and suggests the AI investments are already paying off.

The earnings power is extraordinary. $132 billion in net income. $52 billion in operating cash flow in Q4 alone — a record. Alphabet generates more cash in a quarter than most companies generate in a decade. The balance sheet has minimal debt and the company is returning capital through buybacks and a growing dividend.

The CapEx is the big question mark. $175–$185 billion in planned spending this year is a staggering number. It's going toward AI compute, data centers, and infrastructure. The bull case: this spending locks in Alphabet's AI leadership for a generation. The bear case: it's too much, too fast, and it pressures free cash flow if returns don't materialize quickly.

03

GOOG — Alphabet Inc. (Google)

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