GOOGL valuation — August 2026
for a company with Google’s earnings power. The current P/E is around 17.8×. At around US$354, Alphabet’s valuation is surprisingly reasonable for a company with Google’s earnings power. The current P/E is around 17.8×.
AI capex, rather than deterioration in Google’s core business. Alphabet has increased its 2026 capital-spending expectations to around US$195–205B, which has raised concerns about free cash flow. More importantly, the recent sell-off is largely about massive AI capex, rather than deterioration in Google’s core business. Alphabet has increased its 2026 capital-spending expectations to around US$195–205B, which has raised concerns about free cash flow.
Why Google?
1. Search is still an enormous cash machine
The biggest fear is that ChatGPT/AI search will destroy Google’s search franchise. So far, Google is fighting back with Gemini and AI Overviews while retaining its enormous distribution advantage.
2. Google Cloud is becoming a major growth engine
Cloud is benefiting from AI demand, while Google’s custom AI chips and infrastructure give it some cost advantages.
3. Gemini could become much more important
Unlike many AI companies, Google owns the entire stack:
AI models → TPUs → data centres → Cloud → Search → YouTube → Android
That vertical integration is a significant advantage.
4. Valuation provides some protection
This is the part I particularly like.
If GOOGL can grow EPS around 10–15% annually, paying ~18× earnings isn’t excessive. The market doesn’t need to give Alphabet a 30–40× multiple for the investment to work.
The big caveat is that Alphabet’s US$195–205B AI capex plan is enormous. If AI monetisation doesn’t eventually produce returns on that investment, the market could keep GOOGL’s multiple depressed.
But if Gemini, Cloud and AI Search start producing meaningful incremental revenue while traditional Search remains strong, buying GOOGL around $350 could prove quite attractive over 3–5 years.
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