News about GOOGL

The author warns that the S&P 500 Shiller CAPE ratio, above 41, is extremely elevated, and says investors should favor companies with durable advantages before a downturn. Alphabet is highlighted for products embedded in everyday life, a diversified mix of advertising and Google Cloud, and vertical integration including custom TPU chips. In the second quarter, Alphabet reported revenue of $119.8 billion, up 24%, Google Cloud revenue up 82% to $24.8 billion, operating cash flow of $39.1 billion and $242.5 billion in cash and marketable securities. The article notes Alphabet fell 55% in 2008, about 31% in the COVID-19 crash and about 39% in 2022, and the author suggests buying gradually during dips and holding long term.

In an early-May CNBC interview, Warren Buffett answered “Yeah” when asked whether stock prices were too high, saying many things would look very silly. From May 1 (7,230.12) to Oct. 15 (7,744.06), the S&P 500 rose 7%. Even so, Berkshire Hathaway became a net buyer of stocks in Q2 for the first time in three and a half years, buying about $23.5 billion while selling about $3.7 billion, and it bought back $4.5 billion of its own stock. It also invested in Alphabet, now nearly 13% of its equity portfolio, and in the recent IPO of Bending Spoons, with $600 million in July and $330 million in a private placement this month. The article notes Bending Spoons trades at 29 times forward earnings and will carry significant debt, so it is not a bargain in the traditional sense.

The article argues that the Magnificent Seven together account for more than one-third of the S&P 500's market capitalization, and the author would choose Alphabet as the single stock to own for the next decade. According to the piece, YouTube held a 14.2% share of U.S. daily TV viewing time in July per Nielsen, Waymo was completing 500,000 rides a week, and Google Search made up 53% of Alphabet's revenue. Google Cloud posted second-quarter revenue of $24.8 billion, up 82% year over year. However, Alphabet expects to spend about $200 billion on infrastructure at the midpoint of its plan, free cash flow turned negative in Q2, and the author says investors must be very patient.

J.P. Morgan analyst Doug Anmuth raised his price target for Alphabet stock to $425, about 23% above the current price, betting that selling its custom TPU AI processors to other companies will accelerate cloud revenue. Google Cloud sales rose 82% to $24.8 billion in the second quarter of 2026, and Anmuth thinks cloud revenue could double in the third quarter. Piper Sandler's Thomas Champion estimates Google's processor sales could reach $104 billion by 2028, compared with Alphabet's total second-quarter revenue of $120 billion. Alphabet reported Q2 EPS of $9.11, up 294%, but some investors worry about its roughly $200 billion AI infrastructure spending this year. The stock trades at a trailing P/E of about 17, versus a tech sector average of 33.

U.S. stocks keep hitting record highs, but the so-called Warren Buffett indicator, the total market cap of U.S. stocks relative to GDP, stands at a record 237.5%, far above the 138.5% peak during the early-2000 dot-com mania. The author argues the backdrop shapes how to invest rather than whether to invest, and recommends Pfizer (PFE) and Alphabet (GOOG, GOOGL) despite the warning. Pfizer's revenue has fallen from just over $100 billion in 2021 to around $60 billion, and patent expirations threaten roughly one-third of its drug portfolio, but Padcev sales reached $667 million in Q2, up 23%, and its forward dividend yield is nearly 6%. Alphabet is well positioned in AI as its Gemini chatbot outgrows competitors, Google handles nearly 90% of the world's web queries, and Android runs on 69% of the world's mobile devices.

Alphabet (GOOGL) shares gained 3.43% over six months to October 15, but its 17.62x trailing P/E is misleading because reported earnings were inflated by large investment gains. Google Search revenue rose 17% to $63.3 billion in Q2 2026, even as ChatGPT and Claude offer alternatives to traditional search. Google Cloud revenue jumped 82% to $24.8 billion with a 35.6% operating margin, and its $514 billion backlog is more than half expected to convert to revenue over the next 24 months. About $99 billion of gains, largely unrealized, could reverse if valuations fall; a rough adjustment puts the trailing multiple near 26x, versus a 22.83x forward P/E.

The author predicts Alphabet's Google Cloud revenue will more than double in the third quarter, after growth accelerated to 82% in the second quarter. Management says it is still capacity-constrained and expects to recognize half of its $514 billion revenue backlog over 24 months, averaging $32 billion per quarter. Alphabet is also expanding use of third-party neocloud capacity as a bridge, which CFO Anat Ashkenazi warned will pressure margins, and plans to sell TPU chips directly, with inventory rising to $10 billion from $2.4 billion. Reaching 100% growth would require revenue above $30.3 billion, about $5.5 billion more than in the second quarter. Investors remain concerned about negative free cash flow, and the stock trades at 26 times forward earnings.

AI stocks had a brutal start to October: the Roundhill Neocloud ETF (NCLD) fell 31%, the iShares Semiconductor ETF (SOXX) dropped 13%, and the Defiance AI and Power Infrastructure ETF (AIPO) lost 14%. Rising borrowing costs, investor concern over neocloud leverage, and hot inflation readings that pushed bond yields near two-decade highs drove the sell-off. Baird's Ross Mayfield is overweighting healthcare, financials and energy as hedges, while still adding to hyperscalers and power infrastructure. Travis Prentice of Infomed Momentum favors agentic AI cybersecurity names like CrowdStrike, Okta and Palo Alto Networks, plus AI adopters such as MetLife and Visa. AllianceBernstein's James Russo is pivoting to quality stocks that don't rely on external borrowing, including larger hyperscalers, and chipmakers with durable competitive advantages.