Alphabet Inc. (GOOGL) shares are currently valued at a forward price-to-earnings (P/E) ratio of 25.55, exceeding the Zacks Computer & Technology sector average of 23.78. GOOGL’s stock is trading at a premium compared to Microsoft (MSFT) at 21.95 but at lower multiples than Apple (AAPL) at 28.68 and Amazon (AMZN) at 26.15. Following the fourth-quarter results on February 4, GOOGL shares dropped 8.5% due to investor concerns over a projected capital expenditure of $175-185 billion for 2026, mostly aimed at AI and cloud infrastructure.
Google dominates the search market with an approximate 89.98% share. Recent AI integrations, including Gemini 3, have doubled daily AI Mode queries since launch. Google Cloud, benefiting from strong demand for its AI models, now serves over 120,000 enterprises, contributing to a projected revenue of $407.2 billion in 2026, up 18.8% year-over-year. However, while the consensus estimate for GOOGL earnings in 2026 is $11.60 per share (up 7.3% year-over-year), the first quarter of 2026 is projected to see earnings decline by 1.8% year-over-year.
Despite impressive returns of 89.8% in the last year, concerns over capital spending and higher operational costs have placed a Zacks Rank of #3 (Hold) on the stock, indicating a wait-and-see approach for potential investors.
