Alphabet Inc. (GOOGL) is a holding company that owns Google, the world’s largest search engine with a market share exceeding 90%. The company’s ecosystem includes the leading video platform YouTube, the Android operating system, and one of the fastest-growing cloud businesses — Google Cloud. Alphabet is actively developing artificial intelligence technologies (Gemini), autonomous vehicles (Waymo), and smartphones (Pixel).
The company remains a key beneficiary of the digital economy, effectively converting its AI initiatives into financial results. Its core search and online advertising business has gained new momentum, as the implemented AI tools not only improve targeting efficiency but also enable monetization of new types of complex search queries. Additionally, the cloud segment acts as a second key revenue driver, showing accelerated growth due to rising corporate demand for AI infrastructure. The company’s significant investments in its own chips and data centers create a long-term technological foundation, allowing Alphabet to strengthen its leadership position relative to competitors.
Investment attractiveness factors:
· Accelerated revenue growth through AI adoption in search and cloud services. In Q4 2025, Alphabet’s consolidated revenue grew 18% year-over-year to $113.8 billion, exceeding market expectations. The primary driver was growth in the search segment (+17% YoY) due to the integration of Gemini 3 AI models and the launch of new formats such as AI Overviews. This allows monetization of more complex and longer search queries, increasing ROI for advertisers. Google Cloud demonstrated explosive growth of 48% YoY, generating $17.7 billion in revenue, while the order backlog doubled to $240 billion, ensuring a stable cash flow in the future.
· Significant infrastructure investments for long-term leadership. Management forecasts capital expenditures (CAPEX) of $175–185 billion in 2026 to expand AI capabilities. While this may temporarily pressure free cash flow (FCF), it is justified by record demand for cloud computing. Using its own TPU v7 chips enabled the company to reduce the cost of processing AI queries by 78% within a year, providing Alphabet with a competitive advantage over players reliant on external hardware. The financial position remains strong, with approximately $127 billion in cash on the balance sheet and a positive net cash position.
· New growth points: Waymo, subscriptions, and partnership with Apple. Waymo, the autonomous taxi service, is transitioning from an experimental project to a real business with an estimated valuation of $126 billion, expanding into new U.S. cities and international markets. The subscription segment (YouTube Premium, Music, TV) reached 325 million users, generating steady revenue. A strategically important achievement is the long-term partnership with Apple, under which Gemini models will serve as the basis for new AI features in Apple devices, providing access to an ecosystem of 2 billion devices.
Target price: $365