The answer first
Method changed. The score did not.
The selected method forecasts Search and Network, YouTube advertising, subscriptions, platforms and devices, Google Cloud, and Other Bets. It reconciles shared capex, depreciation, taxes, corporate costs, SBC, dilution, leases, net cash, and terminal reinvestment at enterprise level.
Original P/E based targets were $216 bear, $412.50 base, and $580 bull. The authoritative original weighted value was $405.25, displayed as $405. Expected return was 18.7%.
Those values remain visible only as historical comparison. The separately named original downloads are unchanged.
Company specific valuation method
Primary method
Segment driven enterprise unlevered free cash flow DCF with SOTP attribution. Search and Network, YouTube, subscriptions, Cloud, and Other Bets receive separate revenue and margin paths. Enterprise UFCF reconciles capex, depreciation, working capital, cash taxes, corporate costs, leases, SBC, dilution, buybacks, active net cash, and terminal reinvestment.
Scenarios
9.50% WACC, 2.50% terminal growth. Search and distribution remedies, AI serving cost, Cloud deceleration, and prolonged capex intensity drive the downside.
8.50% WACC, 3.00% terminal growth. Search resilience and Cloud growth offset a long period of AI and data center reinvestment.
7.80% WACC, 3.50% terminal growth. AI monetization, Cloud margin, YouTube economics, and capex normalization compound.
Probability result
| Scenario | Probability | Unrounded target | Contribution |
|---|---|---|---|
| Bear | 25% | $136.499035560 | $34.124758890 |
| Base | 50% | $338.005118012 | $169.002559006 |
| Bull | 25% | $836.815875999 | $209.203969000 |
| Weighted | 100% | $412.331286896 |
Five pillar weighted scorecard
| Pillar | Weight | Original | Revised | Contribution |
|---|---|---|---|---|
| Business Quality | 30% | 10.0 | 10.0 | 3.000 |
| Management Quality | 15% | 7.8 | 7.8 | 1.170 |
| Industry Tailwind | 15% | 8.8 | 8.8 | 1.320 |
| Valuation and Margin of Safety | 30% | 5.8 | 5.8 | 1.740 |
| Risk and Asymmetry | 10% | 6.0 | 6.0 | 0.600 |
| Weighted conviction | 100% | 7.830 | 7.830 | 7.830 |
Business Quality
Quality of the dollar 9.0. Quantity of dollars 9.2. Average 9.1. Margin trajectory modifier +1. Final Business Quality 10.0.
Decision card
Full long, not oversized. Three to five years. Key risk is AI Search and AI infrastructure consuming more capital than incremental operating profit while distribution remedies weaken Search.
Frozen evidence and financial bridge
Primary statements are frozen at Alphabet FY2025 Form 10-K and Q2 2026 Form 10-Q. TTM equals FY2025 plus H1 2026 minus H1 2025 on an unchanged US GAAP consolidated basis.
| Series, USD billions | FY2025 | H1 2026 | H1 2025 | LTM |
|---|---|---|---|---|
| Revenue | 402.836 | 229.692 | 186.662 | 445.866 |
| Operating income | 129.039 | 80.466 | 61.877 | 147.628 |
| Operating cash flow | 164.713 | 102.288 | 81.326 | 185.675 |
| Capital expenditure | 91.447 | 76.432 | 35.477 | 132.402 |
| Free cash flow | 73.266 | 25.856 | 45.849 | 53.273 |
Product revenue sums to $446.215B before a $0.349B hedging adjustment. Reconciled consolidated revenue is $445.866B.
Observable confirmation and failure signals
Core engines
- Search query growth, paid clicks, CPC, AI answer monetization, inference cost, TAC, and distribution agreements.
- YouTube advertising, subscriptions, creator economics, Shorts, and connected TV.
- Cloud growth, $513.9B disclosed Q2 backlog, capacity, margin, power, pricing, and Wiz integration.
Capital conversion
- Capex and depreciation lag, useful lives, power and construction commitments.
- SBC, diluted shares, preferred conversion, capped calls, and buybacks.
- Cash taxes, working capital, leases, active net cash, and regulatory remedies.