Google Cloud Could Grow More Than 50% in 2026. Should You Buy GOOGL Stock Here?

Core Viewpoint - Alphabet (GOOG) has experienced significant price appreciation due to expectations of continued growth driven by AI and productivity technologies, particularly in its online advertising business [1] Group 1: Cloud Business Focus - Analysts from Morgan Stanley emphasize that Alphabet's cloud business is a critical area for investors, predicting over 50% growth for Google Cloud next year [2] - A scenario modeled by Morgan Stanley suggests Alphabet's on-demand business could grow by 15% or more, with an expected $50 billion in net backlog next year [4] Group 2: Revenue Growth Projections - If the projected growth factors materialize, Alphabet's cloud revenue growth rate could double from 25% in 2025, following 29% and 37% growth in 2023 and 2024 respectively [4] - The acceleration in growth is anticipated to be influenced by successful AI integrations [4] Group 3: Investment Attractiveness - From a fundamentals perspective, Alphabet is considered the most attractive stock among its peers in the Magnificent Seven, with a forward price/earnings ratio aligned with the market multiple [6] - The price/cash flow ratio is around 30, indicating a free cash flow yield of approximately 3.3%, suggesting potential for faster growth than previously anticipated [6]