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Back of Napkin

Alphabet Inc. GOOG

Three-pass checkedFiled since 2026-07-23

Written 2026-06-15. The company has filed a quarterly or annual report since, on 2026-07-23, so figures here predate its latest disclosure.

Alphabet sits at 28x trailing earnings and about 34x forward, a market multiple for a business whose Cloud arm is now growing 30%-plus into a structural compute shortage while Search just printed its strongest growth year since 2021.

You're paying for a slightly-above-market multiple on Search and Ads, getting Cloud at roughly inflection-rate scale and the TPU/Gemini/Waymo optionality essentially in the price but not as base-case.

Key data

Sector / industryCommunication Services / Internet Content & Information
Country / FYEUS / December
Price (Jun 15, 2026)$367.11
52-week range$163.33 – $404.47 (price about 91% of high)
Market cap / EV$4.44T / ≈$4.52T
FY2025 revenue / GAAP diluted EPS$403.0B / $10.81
TTM revenue / EPS / net margin≈$420B / ≈$13.24 / 37.9%
Forward P/E (FY26E ≈ $10.80)≈34x
Net cash≈$36B (cash + ST investments net of debt)
Capital return$0.85 div (≈0.23% yield) + heavy buyback

GOOG · price with moving averages

Daily · 6MWeekly · 3Y
$96$177$257$338$419 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Alphabet sells three things. Google Services (Search, YouTube, Android, Play, Pixel, subscriptions) is the cash engine: about $337B of FY25 revenue at high-30s operating margin. Google Cloud (GCP infrastructure + Workspace) is the growth engine: ≈$54B run-rate, growing roughly 30% and finally printing positive operating income at scale. Other Bets (Waymo, Verily, Isomorphic) is ≈$2B revenue and meaningfully unprofitable. The segment doing most of the work today is still Google Services at ≈84% of revenue and well over 100% of consolidated operating profit, with Search ads and YouTube the twin franchises inside it. Cloud is the slice changing the consolidated growth rate.

What the financials don't show but the math needs: Search faces a real product-substitution risk from generative chat interfaces (ChatGPT, Perplexity, Claude), and Alphabet's defense is Gemini integrated directly into the Search results page plus its own silicon (TPU v7) and model stack. The most important fact in the last two quarters is that Search revenue did NOT roll over despite the AI-overview rollout; instead it accelerated, which suggests AI summaries are augmenting query volume rather than cannibalizing the monetized SERP. Whether that holds is the central debate on the stock.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04The linchpins
  5. 05Methodology

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