TLDR
- Alphabet shares dipped despite new AI partnerships in healthcare (Weight Watchers) and government (America.Gov).
- Google Cloud revenue jumped 82% year-over-year to $24.8 billion in Q2 2026.
- Wall Street holds a Strong Buy consensus on GOOGL, with an average price target of $429.08, implying 26% upside.
- A separate 24/7 Wall St. model rates GOOG a Buy with a $559 target, suggesting nearly 64% upside.
- Alphabet trades cheaper than Microsoft and Meta on a forward P/E basis despite faster revenue growth.
Alphabet’s stock slipped even as the company rolled out two new AI initiatives this week. Shares in the Google parent fell despite partnerships spanning healthcare and government services.
The dip came alongside a Weight Watchers tie-up and a new role in a White House tech project. Investors didn’t seem to care, but the underlying numbers still tell a growth story.
Google Health Enterprise is now working with Weight Watchers to deliver AI-powered health coaching. The deal lets employers activate weight-health benefits for staff using Google’s wearable tech and data insights.
Separately, Google was picked as a tech partner for America.gov, the Trump administration’s new AI-driven government portal. Gemini will help power tools for things like license renewals and Medicare enrollment.
Both moves lean on the same engine driving Alphabet’s growth right now. That engine is AI.
Cloud Growth Keeps Beating Expectations
Google Cloud revenue hit $24.8 billion last quarter, up 82% from a year earlier. That’s a sharp acceleration for a business that was already Alphabet’s fastest grower.
Alphabet’s total revenue rose 24% year-over-year to $119.8 billion in the same period. Operating income climbed 30% to $40.77 billion, a cleaner measure than the headline EPS figure, which was inflated by a one-time equity gain.
Cloud’s operating margin expanded from 21% to 36% over the past year. The unit’s backlog now stands at $514 billion, according to 24/7 Wall St.
Gemini has also scaled fast. The app now counts 950 million monthly users, and AI Mode in Search has topped 1 billion monthly users.
Waymo, Alphabet’s self-driving unit, completes more than 500,000 rides a week. YouTube’s ad and subscription business runs above $60 billion a year.
Spending Is Rising Just as Fast
The growth hasn’t come free. Quarterly capital expenditure doubled to roughly $45 billion, pushing free cash flow negative for the period.
Long-term debt nearly doubled too, climbing from $46.5 billion to $98.2 billion. Buybacks have been suspended as a result.
Management has said demand for AI infrastructure is outpacing supply. That’s part of why spending keeps climbing.
News sentiment around the stock has cooled somewhat, dropping from 67.19 to 58.9 since late August. Still, operating cash flow came in at $39.1 billion for the quarter, giving Alphabet plenty of room to keep funding its buildout.
On Wall Street, analysts remain firmly bullish. Alphabet carries a Strong Buy consensus from 28 analysts, with 24 Buy ratings and four Holds.
The average price target sits at $429.08, implying about 26% upside from current levels. A separate model from 24/7 Wall St. is even more optimistic, setting a $559 target that suggests nearly 64% upside.
That target values Alphabet at 22 times forward earnings. For comparison, Microsoft trades at 25 times forward earnings with slower revenue growth of 17.7%, while Meta trades at 22 times with 28% revenue growth but a 13% earnings decline last quarter.
Alphabet closed most recently at $341.08, trading 15.6% below its 52-week high of $403.96. The stock is up 8.91% year-to-date and 38.69% over the past year.
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