Is Alphabet stock a buy after Q3 2026 earnings?

SELL: Alphabet is worth $237.15 against the $280.03 price, as capex outruns the cash the business earns.

Alphabet · Q3 2026 · Published Nov 5, 2026 · Data cut-off: 2026-11-03 · By DeepCell AI · Sources

1 · Cover

SELL: Alphabet is worth $237.15 against the $280.03 price, as capex outruns the cash it earns

The shares fell after results but still sit just above the SELL line. We would buy at $206.22 or below and sell above $279.00.

SELL
Base value per share $237.15 up from $235.20 before results
Price, 3 November close $280.03 $320.21 before results
Value if Cloud holds its pace $264 a HOLD, short of the $322 a BUY needs
Median analyst target $400 above every forward case we model
Capex is ahead of the cash.

Q3 capex of $51,355M exceeded operating cash flow of $42,290M, and 2027 goes higher.

Depreciation is still to come.

It rose to $8,369M from $5,611M. We take it to $75,068M in FY2028, and the margin to 31.2%.

Search slowed, and the base is lower.

It grew 12% against our 16%, which offset the Cloud beat in the revenue base.

Source: Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026) · stockanalysis.com: GOOGL daily price history (close 3 November 2026) · stockanalysis.com: GOOGL analyst forecast (S&P Global consensus, updated 2 November 2026)

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2 · Our view

Q3 EPS of $2.67 missed the $3.02 consensus, and only Cloud beat

Cloud came in above consensus and our forecast. Revenue, Search, operating income and EPS came in below both.

Exhibit 1: EPS excluding equity marks by quarter, against Q3 consensus

USD per share; the line is LSEG consensus for Q3

EPS excluding equity marks · Q4 2025A: $2.67EPS excluding equity marks · Q1 2026A: $2.76EPS excluding equity marks · Q2 2026A: $2.85EPS excluding equity marks · Q3 2026: $2.67$0$1$2$3$4Q4 2025AQ1 2026AQ2 2026AQ3 2026$2.67$2.76$2.85$2.67Q3 consensus: $3.02

Exhibit 2: Q3 2026: reported against consensus and our forecast

Alphabet guides no quarter, so there is no guidance column

USD millions except EPS
Q3 2026 · ConsensusQ3 2026 · Our forecastQ3 2026 · Actual
Google Search & other revenue$M64,960.065,617.763,350.0
Google Cloud revenue$M29,570.028,798.330,709.0
Total revenues$M128,220.0128,191.6127,577.0
Income from operations$M43,190.041,535.240,576.0
EPS excluding equity marks$3.022.832.67

EPS here excludes equity marks. GAAP EPS of $2.12 plus the $0.55 equity-securities loss gives $2.67, the adjusted figure set against LSEG consensus.

Source: Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026) · CNBC: Alphabet sinks 10% as it holds 2026 capex unchanged (28 October 2026) · Reuters via Investing.com (28 October 2026)

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3 · Q3 results

Cloud grew 102.6% against our 90.0%, and the backlog keeps building

Backlog converts over years, so it supports growth; it does not fix how fast it arrives.

Exhibit 3: Google Cloud revenue by quarter

USD billions; dark bars reported, the grey Q4 bar our forecast; the arrow is Q3 against a year ago

Google Cloud revenue · Q3 2025A: $15Google Cloud revenue · Q4 2025A: $18Google Cloud revenue · Q1 2026A: $20Google Cloud revenue · Q2 2026A: $25Google Cloud revenue · Q3 2026: $31Google Cloud revenue · Q4 2026E: $33$0$10$20$30$40Q3 2025AQ4 2025AQ1 2026AQ2 2026AQ3 2026Q4 2026E$15$25$31$33ForecastQ3 year on year: 103%
Cloud backlog, 30 September 2026 $560,800M more than half of total backlog expected within 24 months
Cloud operating margin, Q3 36.2% against our 33.0%

Revenue of $30,709M beat our $28,798M. TPU system sales helped, and Alphabet expects most of those sales to land in 2027.

Source: Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026) · Alphabet Form 10-Q, quarter ended 30 September 2026

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4 · Cloud

Capex ran ahead of operating cash flow in Q3, and depreciation has further to rise

Alphabet held its 2026 guide. The CFO says capex will increase significantly in 2027, with details on the Q4 call.

Exhibit 5: Operating income against capital expenditures, FY2021A to FY2031E

USD billions, FY2021A to FY2031E; the line is the 2027 level CNBC reports capex passing, not a company figure

Income from operations · FY2022A: $75Income from operations · FY2023A: $84Income from operations · FY2024A: $112Income from operations · FY2025A: $129Income from operations · FY2026E: $165Income from operations · FY2027E: $195Income from operations · FY2028E: $216Income from operations · FY2029E: $248Income from operations · FY2030E: $276Income from operations · FY2031E: $307Capital expenditures · FY2022A: $31Capital expenditures · FY2023A: $32Capital expenditures · FY2024A: $53Capital expenditures · FY2025A: $91Capital expenditures · FY2026E: $200Capital expenditures · FY2027E: $251Capital expenditures · FY2028E: $228Capital expenditures · FY2029E: $196Capital expenditures · FY2030E: $166Capital expenditures · FY2031E: $142$0$100$200$300$400FY2021AFY2022AFY2023AFY2024AFY2025AFY2026EFY2027EFY2028EFY2029EFY2030EFY2031E$79$307$25$251$142ForecastFY2027 capex on press reports: $300Income from operationsCapital expendituresIncome from operations · FY2021A: $79Income from operations · FY2022A: $75Income from operations · FY2023A: $84Income from operations · FY2024A: $112Income from operations · FY2025A: $129Income from operations · FY2026E: $165Income from operations · FY2027E: $195Income from operations · FY2028E: $216Income from operations · FY2029E: $248Income from operations · FY2030E: $276Income from operations · FY2031E: $307Capital expenditures · FY2021A: $25Capital expenditures · FY2022A: $31Capital expenditures · FY2023A: $32Capital expenditures · FY2024A: $53Capital expenditures · FY2025A: $91Capital expenditures · FY2026E: $200Capital expenditures · FY2027E: $251Capital expenditures · FY2028E: $228Capital expenditures · FY2029E: $196Capital expenditures · FY2030E: $166Capital expenditures · FY2031E: $142
Q3 free cash flow -$9,065M capex $51,355M, operating cash flow $42,290M
Operating margin, FY2028E 31.2% from 33.3% in FY2026E, as depreciation reaches $75,068M

FY2026 capex is $200,000M at the guided midpoint. The model takes FY2027 to $250,570M; a higher guide lowers the value.

Source: Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026) · CNBC: Alphabet sinks 10% as it holds 2026 capex unchanged (28 October 2026)

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6 · Capex

An equity-securities loss cut GAAP EPS to $2.12; EPS excluding the marks was $2.67

Marks on the equity portfolio are not earnings power, in either direction.

Exhibit 6: Diluted EPS as reported: underlying EPS and the equity marks

USD per share, Q4 2025 to Q3 2026; EPS excluding marks in teal, the equity marks in red, totals as reported

EPS excluding equity marks · Q4 2025A: $2.67EPS excluding equity marks · Q1 2026A: $2.76EPS excluding equity marks · Q2 2026A: $2.85EPS excluding equity marks · Q3 2026: $2.67EPS effect of equity-security gains and losses (as disclosed) · Q4 2025A: $0.15EPS effect of equity-security gains and losses (as disclosed) · Q1 2026A: $2.35EPS effect of equity-security gains and losses (as disclosed) · Q2 2026A: $6.26EPS effect of equity-security gains and losses (as disclosed) · Q3 2026: -$0.55Q4 2025AQ1 2026AQ2 2026AQ3 2026-$2.0$0.0$2.5$5.0$7.5$10.0$2.82$5.11$9.11$2.12$2.85$2.67$6.26
Q3 EPS lost to the equity mark $0.55 on a pre-tax loss of $8,664M
Trailing P/E on EPS excluding marks 25.6x four quarters to September

Underlying EPS fell back in Q3. It was $2.67 after $2.85 in Q2. Every multiple here uses EPS excluding the marks.

Source: Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026)

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7 · Earnings quality

The base value sits just under the HOLD line, and only Cloud holding its pace clears it

The cases are boundaries, not weights. Search eroding, Cloud slowing early and capex without payback all stay SELL.

Exhibit 7: Value per share by case, against the price and the rating lines

USD per share; base on WACC 9.9% and terminal growth 3.5%; the lines are the rating lines at the current price

Low · Sell-side median target: $400Low · DCF: Gordon growth to exit multiple: $237Low · Forward cases: Cloud slows early to Cloud holds its pace: $210Low · Structural: capex without payback to Search erodes: $95Sell-side median targetDCF: Gordon growth to exit multipleForward cases: Cloud slows early to Cloud holdsits paceStructural: capex without payback to Searcherodes$0$100$200$300$400$500$400$237–$404$210–$264$95–$175BUY from: $322Price: $280HOLD from: $238

HOLD starts at $238.03; the base is $237.15. The 16x exit multiple gives $404.24, an upper bound and not a target; the price is 21.2x FY2027E earnings.

Sources: rate, FRED series DGS10 — 10-Year Treasury Constant Maturity Rate · stockanalysis.com: GOOGL daily price history (close 3 November 2026) · stockanalysis.com: GOOGL analyst forecast (S&P Global consensus, updated 2 November 2026)

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8 · Valuation

What would change the rating from here

The price is close to the SELL line. Cloud holding its pace is the one operating case that reaches HOLD.

If we see Value per share Rating
Shares at $206.22 or below The base, 15% above the price BUY
Shares above $279.00 The base, more than 15% below the price SELL, as at $280.03
Cloud holds its pace through FY2027 $264 HOLD. BUY needs $322 at this price
Cloud slows early $210 SELL
Search erodes under AI answers $175 SELL
Capex stays heavy without the payback $95 SELL

SELL. The next test is the 2027 capex figure on the Q4 call.

Source: CNBC: Alphabet sinks 10% as it holds 2026 capex unchanged (28 October 2026) · values from the forward cases and the rating rule

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9 · What would change the rating

The case against the SELL: the backlog converts faster and Cloud holds its pace

Cloud grew 103% and the backlog is still building. If that carries, the rating is HOLD, still short of a BUY.

Exhibit 8: Alphabet revenue backlog by quarter

USD billions, total remaining performance obligations; almost all of it is Cloud

Alphabet revenue backlog, total (remaining performance obligations) · Q3 2025A: $158Alphabet revenue backlog, total (remaining performance obligations) · Q4 2025A: $243Alphabet revenue backlog, total (remaining performance obligations) · Q1 2026A: $468Alphabet revenue backlog, total (remaining performance obligations) · Q2 2026A: $520Alphabet revenue backlog, total (remaining performance obligations) · Q3 2026: $568$0$200$400$600Q3 2025AQ4 2025AQ1 2026AQ2 2026AQ3 2026$158$243$468$520$568
Value if Cloud holds its pace $264 FY2027 Cloud growth of 65%, not 55%, with wider margins
Cloud growth, Q3 103% against our 90%

Why the rating stays SELL today. Backlog converts over years, and the capex that delivers it comes first.

Source: Alphabet Form 10-Q, quarter ended 30 September 2026 · Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026)

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10 · What would make us wrong

What we said and what happened: SELL held, and our forecast missed

We said SELL at $320.21. The shares fell to $280.03, and the value barely moved.

We said SELL before results.

The base value then sat far below the price, well outside the HOLD range.

Value before results $235.20 against a price of $320.21
The price moved, the value did not.

The Cloud beat and the Search shortfall roughly cancel in the model.

Value now $237.15 against a price of $280.03
Our forecast missed on all three lines.

We had EPS of $2.83 against $2.67 reported, Cloud of $28,798M against $30,709M, and Search of $65,618M against $63,350M.

The next test is the 2027 capex figure on the Q4 call.

Source: Alphabet Form 8-K Exhibit 99.1: Q3 2026 results (28 October 2026) · CNBC: Alphabet sinks 10% as it holds 2026 capex unchanged (28 October 2026)

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11 · What we said and what happened

Sources

Not investment advice. Any rating here is this model's view of value against price at the data cut-off.

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