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Alphabet Inc. - Class A Common Stock
Our verdict on Alphabet Inc. - Class A Common 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?
Alphabet's full-year 2025 capital expenditures significantly exceeded 2024 levels. The company reported property and equipment, net of $246.6 billion at year-end 2025, and the Q1 2026 report confirms that 2026 investments are scaling even further from that high 2025 base. (1 exceeded across 1 tracked commitment)
“We expect full year 2025 capital expenditures to exceed full year 2024.”
Management delivered on the commitment to use bank guarantees in lieu of cash for the €3.0 billion EC fine during the fourth quarter of 2025. (1 met across 1 tracked commitment)
“We are currently engaging with the EC and a group of banking partners to place bank guarantees in the fourth quarter of 2025 in lieu of cash payment.”
See the full cited Management analysis of Alphabet Inc. - Class A Common Stock
How durable is the business?
Google Cloud continues to be the primary growth engine, expanding 32% year-over-year. Its revenue share increased to 14.1% of total revenue, and operating margin surged to 20.7% from 11.3% a year ago. (3 expanding across 1 engine)
“an increase in Google Cloud revenues of $7.8 billion, or 63%.”
Google Services revenue grew 12% year-over-year, though its total revenue share slightly decreased to 85.6% as Cloud grew faster. Operating margin improved to 40.1% from 38.9% in the prior year quarter. (3 expanding)
“Google Services $ 73,928 $ 82,543 ... Google Services operating income increased $3.4 billion from the three months ended June 30, 2024 to the three months ended June 30, 2025.”
See the full cited Business Model analysis of Alphabet Inc. - Class A Common Stock
Where does growth come from?
Alphabet is significantly accelerating its capital spending on technical infrastructure, nearly doubling its quarterly CapEx to support AI initiatives. (5 accelerating across 5 signals, 2 leading indicators)
“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.”
Google Cloud revenue growth is accelerating, reaching $9.57 billion in Q1 2024, a 28.4% increase compared to the 28.0% growth seen in the prior year period. (5 accelerating across 5 signals)
“Revenues were $109.9 billion, an increase of 22% year over year, primarily driven by... an increase in Google Cloud revenues of $7.8 billion, or 63%.”
See the full cited Future Growth analysis of Alphabet Inc. - Class A Common Stock
What could break the thesis?
Capital expenditures for technical infrastructure are intensifying significantly. Spending on property and equipment reached $22.4 billion in Q2 2025 alone, compared to $25.2 billion for the entire first half of 2024. (3 intensifying, 1 high-severity)
“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 revenue backlog remains a significant stable risk, totaling $108.2 billion as of June 30, 2025, with 55% expected to be recognized over the next 24 months. (3 stable, 1 easing, 1 high-severity)
“As of March 31, 2026, we have entered into leases primarily related to data centers that have not yet commenced with future lease payments of $75.6 billion that are not yet recorded.”
See the full cited Risk analysis of Alphabet Inc. - Class A Common Stock
Read the full thesis on Alphabet Inc. - Class A Common Stock
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