QS Research · Michael Burry's Scion Capital analyst template · 2006
Alphabet Inc. (GOOG)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -28% · upside +24%
I use the section 13 TTM-to-Sep-30-2026 base, not a cycle average: TTM EBITDA is $184.97B and net cash is $138.98B. At today's 18.4x EV/EBITDA, EBITDA value is $184.97B x 18.4 = $3,403.4B; adding $138.98B net cash and dividing by 12,368M shares gives about $286, essentially today's $286.05, or +0.1%. The 13x downside is $184.97B x 13 = $2,404.6B EV, plus net cash, divided by 12,368M shares = about $206, or -28.1%; the 23x upside is about $355, or +24.2%. The market may be misreading the Q3 EPS drop, which was driven by non-operating mark losses while operating income rose 30%, but with TTM FCF of only $19.75B against $159.80B capex there is no margin of safety; the long rule is not met because downside is worse than -25%, and the short rule is not met because base is not -30%.
Key numbers
- Share price: $286.05
- Market cap: $3,537.87B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $471.10B
- EV / EBITDA (TTM): 18.4x
- P/E (TTM): 15.0x
- Price / book: 5.22x
The 15 boxes
- ✓ 1. Long-form business notes
Alphabet makes money mainly by selling performance and brand advertising on Google Search & other properties, YouTube and Google Network partners' properties, with a second engine in Google Cloud sold as consumption-based fees and subscriptions, and smaller lines in consumer subscriptions (YouTube, Google One), Play, devices and Other Bets. FY2025 (per XBRL) revenue was $402.84B, operating income $129.04B, operating cash flow $164.71B against capex of $91.45B. Between the FY2020 10-K and the latest 10-K the description shifts from BERT/Assistant/COVID-response language to a full-stack AI story: Gemini 3, Ironwood (seventh-generation TPU) and Gemini embedded in all 15 half-billion-user products. Advertising is still the stated primary revenue source in both filings, but the asset intensity has changed: capex rose from $22.28B in FY2020 to $91.45B in FY2025 while D&A rose from (not disclosed) to $21.14B.
- ✓ 2. Competitive advantage
The record shows a very large, growing, high-margin business: revenue rose from $182.53B (FY2020) to $402.84B (FY2025) and operating income from $41.22B to $129.04B, with FY2025 operating cash flow of $164.71B — an advantage of scale, brand and cash generation rather than of captive customers. The company itself says users are "literally one click away" and lists competitors in every line of business, from general search to enterprise cloud to AI model developers. The main stated threats to the advantage are advertising concentration (more than 70% of 2025 revenues) and margin pressure from a mix shift into lower-margin Cloud, devices and subscriptions, funded by a capex build from $22.28B (FY2020) to $91.45B (FY2025).
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) was an operating blowout: revenues $127,577M, +25% YoY, operating income $40,576M (+30%), operating margin 32% vs 31%, with Google Cloud revenues $30,709M (+103%) and Cloud operating income $11,121M vs $3,594M. Reported net income still fell 25% to $26,170M (diluted EPS $2.12, -26%) only because OI&E swung to a $(8,221)M loss from a $12,759M gain, driven by unrealized mark losses largely on SpaceX — a non-operating one-off, not an operating deterioration. Cash generation lagged spending: Q3 2026 operating cash flow $42.3B against capital expenditures of $51.4B, funded with large debt and equity issuance rather than buybacks. No formal revenue or EPS guidance is given; the only forward statement is a significant increase in 2026 technical-infrastructure capex, alongside $130.5B of leases not yet commenced.
- ✓ 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.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.