Buy Alphabet at $350 Because Wall Street’s Former Fear is Now Officially Dead

Alphabet (NASDAQ:GOOGL) looks compelling astatine $351.99, due to the fact that the two-year Wall Street panic that conversational AI would cannibalize Google Search has been decisively invalidated by the numbers. For 24 months, the carnivore lawsuit rested connected a azygous fear: that ChatGPT and its peers would siphon queries distant from the world's ascendant advertisement engine. The astir caller 4th shows the other happening successful existent time.

Alphabet is the genitor of Google Search, YouTube, Google Cloud, Android, and Waymo. The banal has ripped 90.75% implicit the past twelvemonth arsenic investors reprocessed the AI menace arsenic an AI tailwind. The question present is whether the existent terms already reflects that reappraisal, oregon whether much upside remains.

Why the AI Search Fear Just Died

Q1 2026 demolished the carnivore thesis. Google Search & Other gross deed $60.40 billion, up 19% twelvemonth implicit year, with CEO Sundar Pichai confirming that "AI continues to thrust hunt usage and queries are astatine an all-time high.". Gemini-powered AI Overviews are expanding commercialized advertisement inventory astatine higher click-through yields, Gemini-powered AI Overviews are expanding commercialized advertisement inventory astatine higher click-through yields, with Hilton EMEA reportedly capturing one-third much clicks for one-fifth of the spend.

Google Cloud gross grew 63% to $20.03 billion, operating borderline expanded to 32.9% from 17.8%, and backlog astir doubled 4th connected 4th to implicit $460 billion. EPS came successful astatine $5.11 versus $2.6327 estimated, a 94.1% beat, the 4th consecutive beat.

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Why the Bears Still Have a Case

Capex is the counterweight. Q1 superior expenditures much than doubled to $35.67 billion, escaped currency travel collapsed 46.63%, and absorption raised full-year 2026 capex guidance to $180 cardinal to $190 billion, with 2027 expected higher. Return connected that infrastructure walk remains unproven 4th to quarter.