Alphabet’s Biggest Solar Deal Isn’t Really About Going Green. Here’s Why Investors Should Buy the GOOGL Stock Dip.
Alphabet’s (GOOG) (GOOGL) Google is going big on solar. The company recently signed an agreement with Cypress Creek Energy to build its largest solar project in the U.S. The project, named Steel River Energy Center, will be located in Mississippi County, Arkansas. Google will take all the initial output once the project comes online in…
Alphabet’s (GOOG) (GOOGL) Google is going big on solar. The company recently signed an agreement with Cypress Creek Energy to build its largest solar project in the U.S. The project, named Steel River Energy Center, will be located in Mississippi County, Arkansas. Google will take all the initial output once the project comes online in 2029. It will be built in two phases. Phase one will have 1.6 GW of solar and 1.9 GWh of battery storage. Phase two will see the company expand to 2.5 GW of solar and 2.9 GWh of storage once complete. That is enough to power more than 315,000 Arkansas homes. Under the deal, Google will pay a fixed price for the clean power to offset its grid emissions, though the financial terms were not shared. First Solar will supply the panels using all domestic materials, the batteries will come from LG’s plant in Phoenix, and the steel will come from Arkansas itself.
The real story here is power, not clean energy. Alphabet plans to spend as much as $190 billion on capital expenditure in 2026. Most of that will go towards AI data centers, which require a significant amount of electricity. This is an industry-wide problem. The growth of major cloud companies is not restricted by customer demand but by how much power they can secure. Getting ahead of that shortage matters. That makes securing 2.5 GW of future electricity a way for Google to keep its AI plans on track.
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About GOOGL Stock
Alphabet is the parent company of Google. The firm provides internet services, cloud computing, AI solutions, and digital advertising. Its businesses include Google Search, Gmail, Chrome, Android, Google Maps, Gemini, and YouTube. Originally founded in 1998 as Google, the company was restructured as Alphabet in 2015. Led by CEO Sundar Pichai, the company is headquartered in Mountain View, California.
Over the last 12 months, GOOGL stock has grown 94%, vastly outperforming the S&P 500’s ($SPX) 19% gain during the same period. The rise was driven primarily by the exceptional earnings growth and the growing Google Cloud momentum. Over the last month, though, the company’s announcement to raise $80 billion in equity has led to a 3% drop in stock price. The overall sentiment remains positive, as the company was added to the prestigious Dow Jones Industrial Average on June 29.
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By most measures, Alphabet’s valuation might seem appealing to its investors. The forward GAAP P/E of 23.73x sits almost identically with the company’s 5-year average of 23.36x. The forward price-to-sales ratio of 8.44x trades at a 37% premium to its 5-year average of 6.17x. And EPS growth trajectory seems healthy for the most part, with a 31% growth expected in 2026. This EPS growth is expected to dramatically slow down in 2027, primarily due to the heavy capex investments. However, a strong recovery is expected from 2028 onwards as the AI infrastructure investments start to generate returns.
The company’s capital structure is one of the strongest aspects of Alphabet’s valuation, with it being net cash positive by almost $31 billion. A strong balance sheet suggests the company is funding its capex investments from a position of genuine financial strength. The recent decline in the company’s stock has led most analysts to believe that the company is being undervalued at its current price, making it an attractive entry point for investors.
Alphabet Extends Its Double-Digit Revenue Growth Streak to an Eleventh Consecutive Quarter
Alphabet reported its first-quarter fiscal 2026 earnings on April 29. The firm reported revenue of $109.9 billion, up 22% year-on-year (YoY), beating the analyst consensus of $107.2 billion. The company achieved double-digit revenue growth in its 11th consecutive quarter. The EPS of $5.11 also increased considerably by 82%. CEO Sundar Pichai described the quarter as a terrific start to 2026, with the firm delivering its strongest quarter ever in consumer AI plans driven by the Gemini App. The Google Cloud revenue increased 63%, with the backlog being over $460 billion, almost double quarter-on-quarter.
For the second quarter, Alphabet raised its full-year 2026 capex guidance by $5 billion, going from $175-185 billion to $180-190 billion, with the 2027 amount expected to be even higher. The CEO noted that the Google Cloud revenue could accelerate further if not for the supply constraints. He also stated that the company’s AI investments are still in their early stages of driving revenue growth and that agentic AI could potentially create massive opportunities through Google Search moving forward. The company recently announced plans to raise $80 billion through equity offerings to expand its AI infrastructure. Berkshire Hathaway committed $10 billion as an anchor investor, signaling strong confidence in Alphabet’s long-term AI strategy.
What Analysts Are Saying About GOOGL Stock
Earlier this month, TD Cowen analyst John Blackledge increased GOOGL stock’s price target from $450 to $475 while maintaining a “Buy” rating. Bank of America Securities analyst Justin Post and Scotiabank analyst Nat Schindler also reiterated a positive view for the stock, both maintaining a “Buy” rating as well.
Based on the 53 Wall Street analysts, GOOGL stock holds a “Strong Buy” consensus rating with a mean price target of $433.98, indicating a 22% upside. Out of the 54 analysts, not one suggests selling the company’s stock, with even the lowest analyst estimates being higher than the current price. This reflects tremendous confidence in the firm’s long-term growth, with analysts expecting investment in Alphabet to pay dividends even as the company is increasing its capex spending for the year.
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On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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