Key Points
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Alphabet shares have roughly doubled over the past 12 months, lifting its market cap to about $4.4 trillion.
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Google Cloud revenue grew 63% last quarter, and Alphabet’s cloud backlog swelled to more than $460 billion.
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The stock trades at about 26 times forward earnings after the run.
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A year ago, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) traded under $180 per share and carried a market value less than half of today’s. As of this writing, the stock sits at about $360 — a clean double in 12 months, achieved by a company that was already one of the largest in the world when the run began.
A move like that leaves two groups of investors uneasy: those who own the stock and wonder whether to take profits, and those who don’t and wonder whether they missed it. With shares about 12% below their 52-week high after an early July wobble in artificial intelligence (AI) trades, the question is worth asking properly. Is it too late to buy?
It’s not just the stock that’s soaring
The important thing about Alphabet’s run is that it wasn’t only the stock that soared. The earnings power underneath it transformed, too.
In the first quarter of 2026, Alphabet’s revenue rose 22% year over year to $109.9 billion — the company’s 11th consecutive quarter of double-digit growth. Profits came with one caveat: earnings per share soared 82%, but a large slice of that jump reflected unrealized investment gains rather than operations. The cleaner signal was operating income, which rose 30% as operating margin expanded 2 percentage points to 36.1%.
The main engine behind the stock’s run, however, is Google Cloud.
“Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion,” said CEO Sundar Pichai in the company’s first-quarter earnings release.
A backlog isn’t guaranteed revenue, and converting it will take years. But it gives Alphabet’s growth a visibility few businesses this size can claim — customers have effectively reserved hundreds of billions of dollars of cloud computing and AI infrastructure work in advance.
The quarter also showed a strong consumer business. Alphabet said paid subscriptions, led by YouTube and Google One, have reached 350 million — and management called it the company’s strongest quarter ever for its consumer AI plans.
And the core business has seen impressive momentum, too. Google Search and other revenue grew 19% last quarter, quieting the fear that hung over the stock through 2025 — that AI chatbots would erode search advertising. So far, the opposite appears true, with search usage climbing alongside the new AI features.
Is there still room?
A doubled stock naturally raises the suspicion that the price ran ahead of the business. The numbers, however, suggest something more balanced is happening. At about 26 times forward earnings, Alphabet trades near the valuation multiples many slower-growing defensive names command — while compounding revenue at a 20%-plus rate. That isn’t cheap in absolute terms, because nothing growing this fast is. But it’s far from the valuations attached to the market’s more speculative AI names.
Still, buyers today should keep three risks in view.
First, the growth requires staggering investment. Alphabet has lifted its planned 2026 capital spending to as much as $190 billion, and management expects the figure to rise significantly again in 2027. Returns on that capital could take years to prove out.
Second, the bar is high. After cloud revenue accelerated significantly in Q1 to an impressive 63% year-over-year rate, investors will likely expect further acceleration throughout the year. And the same cloud backlog that gives investors visibility also means they have high expectations.
Third, a stock that doubles in a year can retrace sharply on sentiment alone. Alphabet’s own 12% slide from its high in recent weeks is a mild preview of what a broader AI-spending scare could do.
So, is it too late?
I don’t think so — with an adjustment to expectations. The next double will almost certainly take far longer than 12 months, because the market has already repriced Alphabet from doubted search company to AI infrastructure leader. What remains is the slower, steadier compounding of a dominant business still growing faster than almost anything else its size.
For investors who watched the run from the sidelines, Alphabet, at 26 times forward earnings with accelerating growth, arguably beats most defensive names trading at similar multiples with single-digit growth. Starting a position here and building it gradually — in case the AI trade’s summer volatility offers better prices — still looks reasonable for a long-term portfolio. The stock’s rerating is likely over. But the compounding probably isn’t.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
