Key areas to focus on
Google Cloud backlog and profit growth
With third quarter (Q3) backlog reaching $155 billion, investors are eager for updates on conversion speed and confidence in 2026 revenue. Cloud margins will be a key focus, especially after last quarter’s strong performance.
AI monetization signal
Look for mentions of Gemini adoption, company success, or integration into core products like Search and Workspace. Success here could justify billions of dollars in capital expenditures (Capex) on infrastructure.
Outlook for capital expenditures and free cash flow in 2026
Analysts want to know whether heavy investment in AI has peaked. A softer capex guide could signal a positive change in free cash flow and support multiple expansions in the second half of the year (H2).
Segment trends to watch
- Search and YouTube: We expect to see steady double-digit growth driven by strong advertising demand.
- Google Cloud: remains the fastest growing segment and is expected to increase by +35.9% year over year, potentially driving revenue growth.
- Google network: It is the only segment expected to shrink, reflecting continued pressure from changes in the mobile advertising ecosystem.
Rating Snapshot: How is Alphabet rated?
Even after its massive performance in 2025, Alphabet remains in the middle of mega-tech valuations, conditional on continued AI monetization and cloud margin expansion.
