QS Research · Michael Burry's Scion Capital analyst template · 2006
Alphabet Inc. (GOOG)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -22% · upside +30%
At $283.93 the market pays 18.2x TTM EV/EBITDA (N25) and 21.5x EV/EBIT (N26) for $184.97B EBITDA (N11) and $156.98B EBIT (N9); 18.2 x $184.97B = $3,366.5B EV, plus $138.98B net cash = $3,505.4B / 12,368.0M shares = ~$283.4, so the base case is flat and does not meet the +30% long test. The 14.9x P/E is not the operating multiple: net income to common TTM of $235.31B (N12) exceeds EBIT because Q2 2026 alone had $98.0B of unrealized gains (S6), and Q3 2026 EPS fell on a $(8,221)M OI&E swing even as operating income rose 30% (S29). Cloud is real—Q3 2026 revenue $30,709M, +103%, with $11,121M segment operating income and a $561B backlog (S29, S83)—but TTM FCF is only $19.75B after $159.80B capex (N14, N15), a 0.6% yield (N29), and the build is funded with debt/ATM equity (S29). A 24x EV/EBITDA re-rate would give ~$370 (+30%), but that is the upside, not the base; the 14x downside is 14 x $184.97B = $2,589.6B + $138.98B = $2,728.6B / 12,368.0M = ~$220.6 (-22.3%). I wait for a capex/FCF inflection or a lower price.
Key numbers
- Share price: $283.93
- Market cap: $3,511.65B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $471.10B
- EV / EBITDA (TTM): 18.2x
- P/E (TTM): 14.9x
- Price / book: 5.18x
The 15 boxes
- ✓ 1. Long-form business notes
Alphabet monetizes primarily through Google Services advertising on Google Search & other, YouTube, and Google Network partners' properties, plus consumer subscriptions, Google Play, and devices; Google Cloud sells consumption-based infrastructure/platform/application services; Other Bets includes Waymo and other non-Google businesses. S24 shows FY2020-FY2025 revenue rising from $182.53B to $402.84B, operating income from $41.22B to $129.04B, and operating cash flow from $65.12B to $164.71B, while capex rose to $91.45B in FY2025. Between the FY2020 and latest 10-K, the business description shifted toward Gemini/AI-first products, expanded Cloud AI offerings, newer Pixel devices, and Other Bets revenue described as autonomous transportation and internet services. The provided sources do not include Q3 2026 or TTM figures.
- ✓ 2. Competitive advantage
A durable advantage exists, but it is scale, brand and data in advertising and cloud, not a lock-in moat. From FY2020 to FY2025 revenue went from $182.53B to $402.84B and operating income from $41.22B to $129.04B, with FY2025 operating cash flow of $164.71B covering capex of $91.45B. The 10-K itself concedes users are 'one click away' and lists competitors in search, online ads, enterprise cloud, AI models, consumer hardware, digital video, social networks and workspace products, while more than 70% of 2025 revenue was online advertising. The clearest threats to the advantage shown in the filings are regulatory (December 2025 US distribution remedies) and the AI-driven shift in how ads are delivered.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended Sep 30, 2026) was a 25% revenue quarter on a much bigger Cloud line: revenues $127,577M vs $102,346M, Google Cloud $30,709M (+103%, +$15.6B), Google Services $96,302M (+11%), operating income $40,576M (+30%) at a 32%/31.8% margin. Earnings per share fell anyway (diluted $2.12 vs $2.87) because OI&E swung to $(8,221)M from $12,759M on unrealized equity-securities marks — a non-operating item, so the operating trend is up while reported net income is down 25%. Cash generation was strong ($42.3B operating cash flow in the quarter) but capex of $51.4B in the quarter exceeded it, funded partly by debt and ATM equity issuance, with the 10-Q noting a decrease in stock repurchases; inventory jumped to $13,308M from $2,439M at Dec 31, 2025 on TPU systems. No numeric guidance is given in either the 10-Q MD&A or the same-quarter release; the only forward statement is qualitative capex growth.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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