Alphabet Only Requires a Tiny Bit of Faith So I Keep Pulling The Trigger Alex Sirois Wed, October 7, 2026 at 12:45 PM EDT 4 min read GOOG +0.13% MSFT +0.14% AMZN +0.98% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Alphabet's revenue growth accelerated from 16% to 24% over four quarters while shares trade at a reasonable 23x forward earnings with a PEG of 1.3.
GOOGL surged 39% over the past year versus Microsoft's 1% and Amazon's 16%, as Google Cloud's faster growth gives it a clear edge over both rivals.
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I have added to my Alphabet (NASDAQ:GOOGL) position more times than I can count, and I keep coming back for more. Owning it takes a small amount of faith. I have to believe that a company already printing cash from Search will turn its AI spending into revenue. The quarterly reports tell me that is already happening.
Big companies are supposed to slow down. Alphabet keeps getting faster. Revenue growth rose from 15.95% in Q3 FY2025 to 17.99%, then 21.79%, then 24.23% in Q2 FY2026. Google Cloud tells the same story in sharper form.
Its growth rose from 34% to 48% to 63% to 82% over those same four quarters. Search, the business that critics said AI would kill, grew 17% last quarter. And Cloud backlog stood at over $460 billion after the first quarter, so the demand is already signed.
First, I pay a fair price for that growth. Shares trade at about 23 times forward earnings, with a PEG ratio of 1.255. Operating margin expanded 2 points to 34% in Q2, and return on invested capital is 29.60%.
Second, Alphabet keeps delivering. Q2 marked its 11th consecutive EPS beat and its 12th straight quarter of double-digit revenue growth.
Third, the financial position lets me sleep. The debt-to-equity ratio is 0.143 and interest coverage is 175.5x. Management also raised the dividend 5% to $0.22 per share this year. The payout is small, and I value seeing it grow.
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Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) are the obvious cloud alternatives. I want the cloud business that is growing fastest, and a 24/7 Wall St. podcast noted that Google is significantly outgrowing Amazon in the cloud space, helped by its custom TPU chips. The market has noticed. Over the past year, Alphabet shares rose 39.2%, while Microsoft gained 0.97% and Amazon gained 16.02%.
The spending is huge. Management forecast 2026 capex to $175 billion to $185 billion. Free cash flow turned negative at -$5.86 billion in Q2. The company's long-term debt grew from $46.5 billion to $98.2 billion, buybacks were suspended, and it raised $49.6 billion in net equity proceeds, which dilutes me as a shareholder. If AI demand stalls, those dollars become stranded assets. All that capex has to flow to someone, which is why we rounded up seven suppliers fueling the data-center expansion in a free AI infrastructure report.
The cash engine underneath stays strong, which is why I keep adding shares. Operating cash flow grew 40.8% to $39.07 billion last quarter, and customers are already paying for the capacity. Nearly 90% of the Fortune 100 use Gemini Enterprise.
The Gemini App reached 950 million monthly active users, and Google just announced its Gemini 4 Argon model. Wall Street has zero sell ratings on the stock. I treat that as background noise, though, because the numbers I track myself point the same way.
The faith I need keeps shrinking with every quarterly report, and that is why I keep buying.
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