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Alphabet Inc. - Class C Capital Stock
Our verdict on Alphabet Inc. - Class C Capital Stock isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management has significantly accelerated capital spending. For the first six months of 2025, capex reached $39.6 billion, already exceeding the total full-year 2024 capex of $38.3 billion (implied by 2024 10-K data referenced in previous periods). Technical infrastructure assets in service grew from $139.6 billion to $167.5 billion in just six months. (2 exceeded, 1 in progress across 3 tracked commitments)
“We expect full year 2025 capital expenditures to exceed full year 2024. In 2026, we expect to significantly increase, relative to 2025, our investment in our technical infrastructure, including servers, network equipment, and data centers, to support the growth of our business and our long-term initiatives, in particular in support of AI products and services.”
Costs have increased significantly in amount. Total costs and expenses rose from $59.7 billion in Q3 2024 to $71.1 billion in Q3 2025. Operating expenses specifically rose 28% YoY, outpacing revenue growth of 16%, largely due to legal matters and infrastructure depreciation. (1 met across 1 tracked commitment)
“Cost of revenues was $41.4 billion, an increase of 13% year over year... Operating expenses were $29.7 billion, an increase of 28% year over year.”
See the full cited Management analysis of Alphabet Inc. - Class C Capital Stock
How durable is the business?
Alphabet is aggressively expanding its technical moat through massive capital expenditures in AI infrastructure, which increased 88% compared to the prior year's quarter. (1 expanding)
“Capital expenditures, which primarily reflected investments in technical infrastructure, were $22.4 billion for the three months ended June 30, 2025.”
Alphabet is aggressively expanding its technical moat through massive infrastructure investment, with CapEx reaching $24B in the quarter, specifically targeting AI capabilities. (1 expanding)
“In 2026, we expect to significantly increase, relative to 2025, our investment in our technical infrastructure... in particular in support of AI products and services.”
See the full cited Business Model analysis of Alphabet Inc. - Class C Capital Stock
Where does growth come from?
Google Cloud is seeing massive growth, with revenues jumping 63% this quarter, driven by infrastructure and platform services. — Google Cloud Revenue: 63% YoY (+4 more signals)
“Revenues were $109.9 billion, an increase of 22% year over year, primarily driven by an increase in Google Services revenues of $12.4 billion, or 16%, and an increase in Google Cloud revenues of $7.8 billion, or 63%.”
The revenue backlog, primarily tied to Google Cloud, shows a strong new trend of long-term commitment with $92.4 billion in obligations, 55% of which is expected to be recognized within 24 months. (1 new trend, 1 steady across 2 signals)
“As of March 31, 2025, we had $92.4 billion of remaining performance obligations (“revenue backlog”), primarily related to Google Cloud.”
See the full cited Future Growth analysis of Alphabet Inc. - Class C Capital Stock
What could break the thesis?
Alphabet is spending heavily on 'technical infrastructure' (like servers and data centers) to keep up with AI demands. This has led to a massive increase in capital expenditures, which could hurt profit margins if the investment doesn't pay off quickly. [BALANCE_SHEET] (+4 more risks)
“During the three months ended March 31, 2025 and 2026, we spent $17.2 billion and $35.7 billion on capital expenditures, respectively. In 2026, we expect to significantly increase, relative to 2025, our investment in our technical infrastructure.”
The risk is INTENSIFYING as capital expenditures more than doubled year-over-year, reaching $35.7 billion in Q1 2026 compared to $17.2 billion in Q1 2025. (2 intensifying, 1 stable)
“During the three months ended March 31, 2025 and 2026, we spent $17.2 billion and $35.7 billion on capital expenditures, respectively. In 2026, we expect to significantly increase, relative to 2025, our investment in our technical infrastructure.”
See the full cited Risk analysis of Alphabet Inc. - Class C Capital Stock
Read the full thesis on Alphabet Inc. - Class C Capital Stock
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