Alphabet(US:GOOG) ZACKS·2026-02-26 17:55Core Insights - Alphabet (GOOGL) is experiencing significant growth in Google Cloud, which is projected to account for 14.6% of its revenues by 2025, with revenues increasing by 35.8% to $58.71 billion [1][10] - The cloud backlog has surged by 55% to $240 billion, driven by advancements in AI infrastructure and generative AI solutions [1][10] Group 1: Google Cloud Performance - Google Cloud's revenues are bolstered by strong demand for enterprise AI infrastructure, including TPUs and NVIDIA GPUs, as well as services like cybersecurity and data analytics [2] - In Q4 2025, revenues from products built on generative AI models grew nearly 400% year over year, indicating robust adoption of AI technologies [2] - The number of Google Cloud clients doubled from Q1 to Q4 2025, with a record number of deals worth $1 billion or more, reflecting increased customer commitments [3] Group 2: Competitive Landscape - Google Cloud is expected to enhance its competitive position with the acquisition of Wiz, which is anticipated to be completed in 2026, allowing it to better compete with Amazon and Microsoft [4] - Amazon holds a 28% share of the global cloud infrastructure market, while Microsoft Azure has a 21% share, compared to Google Cloud's 14% [5] Group 3: Investment and Growth Projections - Alphabet plans to invest between $175 billion and $185 billion in capital expenditures for 2026, which is expected to support its growth in the cloud sector [4] - Amazon is also significantly increasing its capital expenditure for AWS, committing $200 billion for 2026, while Microsoft Azure's revenues grew by 38% in constant currency [6][7] Group 4: Stock Performance and Valuation - GOOGL shares have appreciated by 85.7% over the past 12 months, outperforming the broader Zacks Computer and Technology sector, which returned 30.1% [8] - The stock is trading at a forward price/sales ratio of 9.01X, higher than the sector average of 6.43X, indicating a premium valuation [12]