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Alphabet Inc. Class C (GOOG)
NASDAQ:GOOG
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Alphabet Class C
(NASDAQ:GOOG)
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Rating:81Outperform
Price Target:
$385.00
▲(23.62% Upside)
Action:ReiteratedDate:02/05/26
High score is driven primarily by strong financial performance (scaled profitability and earnings power) and supportive technical trend. This is tempered by premium valuation and earnings-call risks tied to a very large 2026 CapEx ramp and faster depreciation that may pressure near-term cash flow despite strong AI and Cloud momentum.
Positive Factors
Scale & diversified ad ecosystem
Alphabet's massive, diversified ad ecosystem (Search, YouTube, plus 325M subscriptions) sustains durable cash generation and market reach. Large scale reduces unit economics risk, supports ad inventory pricing power, and underpins long-term monetization of new AI experiences.
Google Cloud growth and improving margins
Rapid Cloud revenue growth with a rising operating margin and a materially larger backlog indicates structural enterprise demand for AI-enabled cloud services. Sustained high-margin expansion diversifies revenue away from ads and strengthens long-term earnings stability and enterprise customer stickiness.
Strong cash generation & historically conservative balance sheet
Consistent, scaled operating cash flow and a large cash reserve enable sustained R&D, strategic investments, and capital returns. The historically low leverage and large equity base provide financial flexibility to fund AI infrastructure and strategic bets without immediate liquidity pressure.
Negative Factors
Massive 2026 CapEx ramp
A near-doubling of CapEx represents a structural shift in investment intensity that will materially raise depreciation and fixed costs. Execution, supply constraints, and timing risk could impair near-to-medium-term free cash flow and require sustained high utilization to justify the capacity build.
Free cash flow volatility
A sharp FCF decline introduces uncertainty in capital allocation and shows sensitivity to investment cadence and working capital. If elevated CapEx or working-capital swings persist, free cash flow could remain volatile, constraining flexibility for buybacks, dividends, or opportunistic M&A.
Rising debt and Other Bets losses
The notable step-up in debt reduces prior balance-sheet conservatism while sizable Other Bets charges (e.g., Waymo) are an ongoing drag. Higher leverage plus continued investment in loss-making bets increases capital allocation risk and could limit optionality if macro stress appears.
Alphabet Class C (GOOG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.77T
Dividend Yield0.26%
Average Volume (3M)22.18M
Price to Earnings (P/E)28.8
Beta (1Y)1.06
Revenue Growth13.55%
EPS Growth34.26%
CountryUS
Employees185,719
SectorCommunication Services
Sector Strength97
IndustryInternet Content & Information
Share Statistics
EPS (TTM)2.82
Shares Outstanding5,438,000,000
10 Day Avg. Volume18,221,707
30 Day Avg. Volume22,176,730
Financial Highlights & Ratios
PEG Ratio0.84
Price to Book (P/B)9.13
Price to Sales (P/S)9.41
P/FCF Ratio51.76
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue9.46
Enterprise Value/Gross Profit15.86
Enterprise Value/Ebitda21.10
Forecast
1Y Price Target
$384.45Price Target Upside23.45% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
EPS Forecast (FY)11.43
Revenue Forecast (FY)$469.61B
Alphabet Class C Business Overview & Revenue Model
Company DescriptionAlphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.
How the Company Makes MoneyAlphabet generates the majority of its revenue through its advertising business, which includes Google Ads and YouTube Ads. Businesses pay to have their ads displayed on Google search results and across various websites in the Google Display Network, as well as on YouTube. Additional revenue streams come from Google Cloud services, where the company provides cloud computing solutions to businesses and organizations. Other significant sources of income include hardware sales from devices like Pixel phones and Nest products, as well as revenue from Google Play Store and other subscription services. Alphabet also engages in partnerships with various companies and organizations, enhancing its ecosystem and driving further revenue through collaboration and shared technology initiatives.
Alphabet Class C Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call emphasized strong, broad-based growth driven by AI investments: record annual revenue (> $400B), accelerated Search (17% YoY), exceptional Google Cloud growth (48% YoY) with backlog up 55% QoQ, rapid monetization of generative AI products (~400% YoY growth), and large-scale adoption of Gemini (750M MAUs, >8M enterprise seats). Profitability and cash flow are robust (net income +30%, record operating cash flow). Notable challenges include a $2.1B Waymo-related charge, materially higher operating expenses and depreciation, supply constraints for AI compute, and a massive planned CapEx increase ($175–$185B for 2026) that will pressure the P&L and requires execution. Early-stage monetization of new AI search experiences and some softness in specific ad channels (network ads down 2%) are additional risks. Overall, positives around AI-driven revenue and adoption materially outweigh the near-term expense and capacity challenges.Q4-2025 Updates
Positive Updates
Record Annual Revenue Surpasses $400B
Alphabet reported full-year 2025 consolidated revenues of $403.0 billion, up 15% year over year, marking the first time annual revenues exceeded $400 billion.
Strong Q4 Revenue and Profitability
Q4 consolidated revenues were $113.8 billion with operating income of $35.9 billion (operating margin 31.6%). Net income rose 30% to $34.5 billion and EPS increased 31% to $2.82.
Search Acceleration
Search and other advertising revenues grew 17% year over year to $63.1 billion in Q4 led by broad vertical strength (notably retail); Search usage and new AI experiences drove longer and more conversational sessions (AI mode queries ~3x longer).
Google Cloud Outstanding Growth
Google Cloud revenues accelerated 48% year over year to $17.7 billion in Q4. Cloud operating income more than doubled to an additional $5.3 billion and operating margin rose to 30.1% from 17.5% a year ago. Backlog grew 55% sequentially to $240 billion.
Generative AI Monetization Momentum
Revenue from products built on generative AI models grew nearly 400% year over year in Q4. More than 120,000 enterprises use Gemini; 95% of the top 20 and >80% of the top 100 SaaS companies use Gemini.
Gemini Adoption and Efficiency Gains
Gemini app surpassed 750 million monthly active users (added ~100M MAUs in Q4) with higher engagement since Gemini 3 launch. Gemini serving unit costs were lowered by 78% during 2025; first-party models process over 10 billion tokens per minute (up from 7 billion last quarter).
Enterprise Adoption of Gemini Enterprise
Alphabet sold over 8 million paid seats of Gemini Enterprise to more than 2,800 companies. Gemini Enterprise managed over 5 billion customer interactions in Q4, growing 65% year over year.
Strong Cash Generation and Capital Return
Record operating cash flow of $52.4 billion in Q4 and $160.5 billion for the full year; Q4 free cash flow $24.6 billion. Ended quarter with $120.8 billion in cash and marketable securities. Returned $5.5 billion in share repurchases and paid $2.5 billion in dividends in Q4.
YouTube and Content Engagement Strength
YouTube annual revenues surpassed $60 billion across ads and subscriptions. Shorts averages over 200 billion daily views; October 2025 viewers watched 700+ million hours of podcasts on living room devices (up 75% YoY). Creator and viewer AI tool adoption strong (1M channels used AI creation tools daily in December; 20M viewers used Gemini-powered tools).
Waymo Progress and Fundraising
Waymo raised its largest investment round, surpassed 20 million fully autonomous trips, and now provides over 400,000 rides per week while expanding geographically (new market: Miami, planned expansion in US, UK, Japan).
Negative Updates
Waymo-Related Charge and Other Bets Losses
Alphabet recorded a $2.1 billion stock-based compensation charge tied to an increase in Waymo's valuation, contributing to Other Bets operating loss of $3.6 billion and negatively impacting operating income and margin for the quarter.
Steep Increases in Expenses and Depreciation
Total operating expenses rose 29% to $32.1 billion; R&D expense increased 42% driven by compensation and depreciation. Depreciation increased to $21.1 billion in 2025 (up ~38% from $15.3 billion in 2024), and management expects depreciation growth to accelerate in 2026 as CapEx ramps.
Massive CapEx Commitment and Supply Constraints
Alphabet expects 2026 CapEx of $175–$185 billion (massive ramp from $91.4 billion in 2025), while noting tight supply environment and constraints (power, land, supply chain) that could limit the pace of capacity expansion for AI compute.
YouTube Advertising Headwinds and Network Ad Decline
YouTube advertising revenues grew 9% to $11.4 billion, but network advertising revenues declined 2% year over year. Management cited lapping of strong US election ad spend and some brand softness as headwinds to ad growth.
Monetization of New AI Search Experiences Still Early
AI mode and AI overviews are driving engagement (longer, more complex queries) but monetization experiments (ads below AI responses, direct offers in AI mode) are in early testing — monetization path is promising but not yet proven at scale.
Rising Cost of Revenue and Content Spend
Total cost of revenue rose 13% to $45.8 billion in Q4, driven by higher depreciation, content acquisition costs (YouTube) and technical infrastructure operations, pressuring gross margins.
Foreign Exchange and Near-Term Revenue Variability
Management noted FX volatility could affect Q1 2026 revenues despite expecting a spot-rate tailwind; exchange rate fluctuations present near-term revenue uncertainty.
Company Guidance
Alphabet's forward guidance centered on a heavy investment cadence: CapEx is expected to be $175–$185 billion in 2026 (Q4 2025 CapEx was $27.9B; FY2025 was $91.4B), with spending ramping over the year and an FX tailwind to Q1 revenues at current spot rates (but subject to volatility). Management warned depreciation will accelerate in Q1 and meaningfully for the full year—after depreciation rose from $15.3B in 2024 to $21.1B in 2025 (≈+38% or +$5.8B)—driven by higher technical infrastructure spend; roughly 60% of CapEx is for machines/servers and ~40% for data centers/networking (a similar split anticipated in 2026). They expect just over half of ML compute to serve Google Cloud, highlighted continued hiring in AI and Cloud, and noted supply, component pricing, and payment timing could cause variability in reported CapEx.Alphabet Class C Financial Statement Overview
Summary
Strong and scaled profitability and earnings power (revenue >$400B; net income grew materially over 2020–2025) with a historically conservative balance sheet. Offsets include slowing top-line growth, a notable 2025 debt step-up, and a sharp 2025 free-cash-flow decline that adds near-term volatility.Income Statement
Alphabet shows very strong profitability and scale. Revenue rose from $182.5B (2020) to $402.8B (2025), with margins remaining healthy (2024 gross margin ~58%, net margin ~29%, EBIT margin ~34%). Earnings have grown meaningfully (net income $40.3B in 2020 to $132.2B in 2025). The main weakness is a clear deceleration in growth—2025 revenue growth is ~4.5% versus much higher levels earlier—suggesting a more mature growth profile and potentially more sensitivity to cyclical ad demand.92
Very Positive
Balance Sheet
The balance sheet is conservatively positioned with low leverage and a large equity base. Debt relative to equity remained low in 2020–2024 (~0.08–0.12), and equity expanded materially ($222.5B in 2020 to $415.3B in 2025). Returns on equity were strong in 2023–2024 (~26%–31%), supporting high-quality earnings. The key watch item is the sizable step-up in total debt in 2025 ($59.3B vs. $25.5B in 2024), which reduces prior balance-sheet conservatism even though the overall capital structure still appears very manageable.88
Very Positive
Cash Flow
Cash generation is strong and scaling: operating cash flow increased from $65.1B (2020) to $164.7B (2025). Free cash flow was solid and generally growing through 2024 ($72.8B), but momentum weakened in 2025 with free cash flow down ~39% year over year (to $73.3B, versus a higher 2024 base implied by the decline rate). Cash conversion was good in 2021–2024, with operating cash flow exceeding net income and free cash flow representing a meaningful portion of earnings (roughly ~58%–73%), but the 2025 free cash flow drop introduces more volatility and raises questions about near-term investment intensity or working-capital swings.80
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 402.96B | 350.02B | 307.39B | 282.84B | 257.64B |
| Gross Profit | 240.43B | 203.71B | 174.06B | 156.63B | 146.70B |
| EBITDA | 179.96B | 135.39B | 97.97B | 85.16B | 103.52B |
| Net Income | 132.17B | 100.12B | 73.80B | 59.97B | 76.03B |
Balance Sheet | |||||
| Total Assets | 595.28B | 450.26B | 402.39B | 365.26B | 359.27B |
| Cash, Cash Equivalents and Short-Term Investments | 126.84B | 95.66B | 110.92B | 113.76B | 139.65B |
| Total Debt | 72.03B | 25.46B | 27.12B | 29.68B | 28.39B |
| Total Liabilities | 180.02B | 125.17B | 119.01B | 109.12B | 107.63B |
| Stockholders Equity | 415.26B | 325.08B | 283.38B | 256.14B | 251.63B |
Cash Flow | |||||
| Free Cash Flow | 73.27B | 72.76B | 69.50B | 60.01B | 67.01B |
| Operating Cash Flow | 164.71B | 125.30B | 101.75B | 91.50B | 91.65B |
| Investing Cash Flow | -120.29B | -45.54B | -27.06B | -20.30B | -35.52B |
| Financing Cash Flow | -37.39B | -79.73B | -72.09B | -69.76B | -61.36B |
Alphabet Class C Technical Analysis
Neutral
311.43
Price Trends
320.53
Negative
301.96
Positive
250.14
Positive
Market Momentum
-4.30
Positive
44.60
Neutral
60.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOOG, the sentiment is Neutral. The current price of 311.43 is below the 20-day moving average (MA) of 318.05, below the 50-day MA of 320.53, and above the 200-day MA of 250.14, indicating a neutral trend. The MACD of -4.30 indicates Positive momentum. The RSI at 44.60 is Neutral, neither overbought nor oversold. The STOCH value of 60.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GOOG.
Alphabet Class C Risk Analysis
Alphabet Class C disclosed 28 risk factors in its most recent earnings report. Alphabet Class C reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alphabet Class C Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $3.77T | 28.82 | 35.70% | 0.26% | 13.55% | 34.26% | |
81 Outperform | $1.64T | 27.60 | 30.24% | 0.32% | 22.17% | -2.66% | |
80 Outperform | $3.88T | 33.42 | 152.02% | 0.38% | ― | ― | |
74 Outperform | $2.92T | 24.57 | 34.39% | 0.71% | 16.67% | 28.60% | |
65 Neutral | $417.89B | 27.33 | 70.60% | 1.00% | 11.08% | 29.56% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
46 Neutral | $43.49B | 74.55 | 2.03% | ― | -2.70% | -56.75% |
* Communication Services Sector Average
GOOG
Alphabet Class C
311.43
143.43
85.38%
AAPL
Apple
264.18
27.18
11.47%
BIDU
Baidu
124.44
40.12
47.58%
META
Meta Platforms
648.18
-4.81
-0.74%
MSFT
Microsoft
392.74
6.32
1.64%
ORCL
Oracle
145.40
-14.99
-9.35%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.