The Institutional Flight-to-Quality Rotation Is On So I Buy Alphabet Alex Sirois Mon, November 9, 2026 at 12:45 PM EST 4 min read GOOGM +1.09% MSFT +2.72% BRK-B +0.70% META +5.17% 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 (GOOGL) is a buy after its 19% monthly drop, with Google Cloud revenue up 103% to $31 billion.
Microsoft (MSFT) trades at 29 times earnings with a lower free cash flow yield than Alphabet, so the author passes.
Capex jumped 114% to $51 billion and free cash flow turned negative, making AI spending the biggest threat to the position.
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I picked up more Alphabet (NASDAQ:GOOGL) last week and expect to add again next month. The stock closed at $284.78 on November 6, down 18.75% over the past month. I treat each leg lower as a lower entry price on a business that covers Search, Cloud, and custom AI chips.
Markets turned nervous fast. The VIX hit 28.18 on November 5, a 98.4 percentile reading for the past three months. My view: Institutions are pivoting to quality after the midterm shake-up, and I want to own what they want to own. Among 28 tracked institutional filers at the June 30 quarter end, 12 added shares and 4 opened new positions, while 8 cut. Berkshire Hathaway (NYSE:BRK-B) held 78,791,167 shares.
Alphabet owns the front door of the internet and now rents out the engine room of AI. Search pays the bills, while Cloud and its custom TPU chips build the next decade.
Cloud is accelerating. Google Cloud revenue reached $30.71 billion in the third quarter, up 103%. Growth ran 48%, 63%, 82%, then 103% over four straight quarters. Segment operating income rose to $11.12 billion from $3.59 billion a year ago, and backlog exceeded $460 billion back in Q1.
Search keeps growing alongside AI. Search and other revenue rose 12% to $63.35 billion, and the Gemini app reached 1 billion users. CEO Sundar Pichai said "our year-over-year query growth rate is the highest it's been in the last five years."
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I get it at a value price. Alphabet trades at 13 times earnings with a 35.70% return on equity, debt-to-equity of 0.143, and interest covered 175.3x times over. The $0.22 quarterly dividend rose 5% this year. The reported EPS miss ($2.12 against a $2.9659 consensus) traces to an $8.7 billion equity securities loss that cut EPS by $0.55. Operating income rose 29.9%.
Microsoft (NASDAQ:MSFT) trades at 29 times earnings, and its 1.70% free cash flow yield trails Alphabet's 2.09%. Azure grew 48% last quarter. I prefer paying less for faster cloud growth.
The social media giant, Meta Platforms (NASDAQ:META), carries debt-to-equity of 0.386, agreed to an $18.59 billion settlement with state attorneys general, and faces more youth trials. Its third-quarter operating margin fell to 20% from 40%.
Spending is the real threat. Capex hit $51.36 billion, up 114%, and free cash flow went negative at -$9.07 billion. Alphabet issued $28.7 billion in notes and keeps $27.6 billion available for at-the-market share sales, which dilutes me. If AI demand cools, those data centers become an expensive anchor. The expansion also has to be powered, cooled, and connected by somebody, and we pulled seven of those suppliers into a free AI infrastructure report.
I keep holding because the same quarter produced $42.29 billion in operating cash flow, net debt is 0.19 times EBITDA, and the expansion already shows up in Cloud profits.
The stock gained 608.16% over ten years, and Pichai now describes a "half-trillion dollar revenue run rate." When nervous money goes looking for quality, Alphabet's cash flow and Cloud profits put it on the list.
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