This article first appeared on GuruFocus.
Alphabet (NASDAQ:GOOGL), Google’s search, cloud and artificial-intelligence powerhouse, slipped to $337.16 Thursday morning as investors dug past the headline numbers and zeroed in on a monster $77.1 billion unrealized gain on equity securities. Using the chart price instead of the earlier $341.30 quote puts the stock roughly 2.2% below the prior close implied by the original 1% move. That matters because Alphabet’s quarter was spectacularbut a huge mark-to-market investment gain is not the kind of profit investors can simply pencil in every quarter.
The real fireworks are inside the business. Quarterly revenue rocketed 24% to $119.8 billion, Google Cloud surged 82% to $24.8 billion, and backlog ballooned to $514 billion. Alphabet is responding by going even bigger, pushing expected 2026 capital expenditures to a staggering $195 billion-$205 billion. That is the AI arms race in one number. Alphabet is pouring mountains of cash into data centers, chips and computing capacity because management clearly believes demand is nowhere near finished.
But investors are already paying up for that growth story. At $337.16, Alphabet trades 34.94% above its $249.86 GF Value estimate. That puts the pressure squarely on Search and Cloud to keep delivering because temporary investment gains cannot carry the valuation forever. The expanding Marvell relationship gives Alphabet another weapon in custom AI silicon, but it also shows just how capital-hungry this battle has become. The message from the valuation chart is hard to miss: Alphabet is priced for serious execution, and with the shares sitting nearly 35% above GF Value, merely good growth may no longer be good enough.
