Alphabet's AI-Powered Growth Leaves Skeptics Behind

Despite growing skepticism about Alphabet's (GOOGL) future, author Alex Sirois remains bullish on the company. In a recent article, he explained why he continues to invest in GOOGL.

The company has seen significant growth in its Search revenue, which rose 17% to $63B in Q2 FY2026, and Cloud surged 82% to $25B. Sirois notes that despite the market-level P/E of 15, Alphabet's cloud is outpacing Azure's growth at a cheaper multiple than Microsoft (MSFT).

Alphabet's $175B+ CapEx has pushed free cash flow negative, but a $460B cloud backlog and 34% operating margin justify the infrastructure bet. Sirois believes that the balance sheet is a fortress, with a debt-to-equity of 0.143, interest coverage of 175.5x, ROE of 35.7%, and ROIC of 29.6%. He argues that at a trailing P/E of 15 on a business compounding earnings this fast, he is paying a market multiple for above-market returns.

Sirois highlights three reasons why he keeps adding to his position in Alphabet: the growth is broadening across segments, Google Cloud is finally becoming the growth engine bears said it would never become, and the balance sheet is strong. He notes that Microsoft gets the AI-cloud headlines, but Alphabet's cloud growth of 82% YoY is running faster than Azure's disclosed pace.

While acknowledging the substantial CapEx bill, Sirois believes that the investment is paying off in terms of revenue and operating margin expansion. He concludes that his conviction holds because Alphabet is being paid to win the argument.