Alphabet GOOGL is set to release its first-quarter 2026 earnings report on April 29. Here’s Morningstar’s take on what to look for in Alphabet’s earnings and the outlook for its stock.

Key Morningstar Metrics for Alphabet

  • Fair Value Estimate: $340.00
  • Morningstar Rating: ★★★
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Medium

Alphabet earnings release date

  • Wednesday, April 29, after the close of trading

What to watch for in Alphabet’s Q1 earnings

  • We expect search to remain resilient as artificial intelligence continues to unlock net new monetizable queries while giving Alphabet more context, enabling better targeting.
  • We think Google Cloud will be the star of the show. We are expecting breakneck growth in GCP, powered by increased AI spending, enterprise adoption of Gemini, and growing TPU sales to large labs such as Anthropic.
  • We will be keeping a keen eye on margins, as increased capital intensity from prior quarters will begin hitting the firm’s income statement via depreciation. We are also interested in what the firm’s updated 2026 capital expenditure forecast will look like. Given robust AI demand, we could see a modest uptick.
  • Going into the company’s report, we think its stock is fairly valued. 

Fair Value Estimate for Alphabet

With its 3-star rating, we believe Alphabet stock is fairly valued compared with our long-term fair value estimate of $340 per share, implying a 2026 adjusted price/earnings multiple of 31 times and an enterprise value/adjusted EBITDA multiple of 22 times. We forecast Alphabet’s top line growing at a 15% compound annual growth rate over the next five years.

Economic Moat Rating

We believe Alphabet merits a wide economic moat rating owing to the intangible assets, network effects, cost advantages, and customer switching costs that permeate a variety of its businesses. We assign wide moats to Google Search, YouTube, Google Cloud, Android, and Google Play, owing to significant intangible assets and a network effect.

We believe that Alphabet’s hardware portfolio, which includes the Pixel and Nest group of products, Chromecast, and Fitbit, does not merit an economic moat as a stand-alone business, primarily due to the lack of material disclosure. While Alphabet’s other bets portfolio includes some interesting companies, including Waymo (one of the leaders in autonomous vehicles), the segment continues to burn capital, generating returns well below its cost of capital. As a result, we ascribe a no-moat rating to Alphabet’s other bets business.

Financial strength

We view Alphabet’s financial position as virtually unassailable. The firm closed 2025 with cash and cash equivalents of $127 billion, more than offsetting its debt balance of $46 billion. The firm’s advertising business is a cash-generating machine, churning out tens of billions of dollars in free cash flow annually. Alongside advertising, Alphabet is making progress toward diversifying its cash generation, with Google Cloud and YouTube subscription sales as additional free cash flow drivers.

Risk and uncertainty

We assign Alphabet an Uncertainty Rating of Medium. This reflects our belief that despite the near-term uncertainty around antitrust regulation and potential competition in the AI-infused search market, Alphabet is well-positioned to expand its overall business while maintaining a rock-solid balance sheet.

We believe Google’s intangible assets and network effects will likely safeguard its dominance in the search space. Further, the firm’s continued investments in AI, which Alphabet can leverage across nearly every business it operates, should be value-accretive despite introducing uncertainty to the range of outcomes for Alphabet’s top line. We do think Google Search’s status as the runaway leader in search could come under pressure, primarily due to the antitrust scrutiny. While we don’t see the firm’s market leadership slipping due to antitrust concerns, this issue adds uncertainty to an otherwise stable business.

The firm’s high dependence on user behavior data represents an environmental, social, and governance risk. If it fails to maintain adequate data privacy and security, Google’s advertising business would likely suffer, and users’ trust in the firm’s other products would likely falter.

GOOGL bulls say

  • Alphabet’s core advertising business is deeply entrenched in advertising budgets, allowing the firm to benefit from a secular increase in digital advertising spending
  • The firm’s advertising business generates substantial cash flows that it can reinvest in growth areas such as GCP, AI-infused search, and aspirational projects like Waymo.
  • Alphabet has a huge opportunity in the lucrative public cloud space as a key cloud vendor to enterprises looking to digitize their workloads.

GOOGL bears say

  • While Alphabet is seeking to diversify its business away from search, text-based advertising remains the largest contributor to the firm’s top line, creating a concentration risk.
  • Alphabet’s continued investments in new, often unproven technologies have been a drag on cash flows.
  • Regulators around the world are keying in on Alphabet’s search dominance and could upend the search market by imposing deep structural changes.