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QS Research · Michael Burry's Scion Capital analyst template · 2006

Alphabet Inc. (GOOGL)

As of 2026-11-02 · 12/15 boxes filled from SEC filings and market data

Conclusion: WATCH

Conviction low · base case 0% · downside -2% · upside +30%

At $282.97, Alphabet's market cap is $3,499.77B and it trades at 14.9x TTM net income of $235.31B (N11, N25). Applying the comparable P/E range of 14.5–19.3x gives a downside of $3,412B (-2.5%) and an upside of $4,541B (+30%) versus today's price, while the base case at current market price yields 0% (N6, S1). But that net income includes $37.7B and $98.0B of one-time unrealized gains in Q1/Q2 2026, so normalized earnings power is lower and the true P/E is higher than it looks, and TTM free cash flow is only $19.75B on $159.80B capex (S99, S100, N14, N13). The stock is therefore not yet a long under the rule—base case is not +30%—but the limited downside and 30% upside if re-rated to AMZN's multiple make it a watch, not a pass.

Key numbers

The 15 boxes

  1. ✓ 1. Long-form business notes

    Alphabet is a collection of businesses, the largest being Google, which is reported as Google Services and Google Cloud; non-Google businesses are reported collectively as Other Bets. Google Services generates revenue primarily from advertising on Search, YouTube, and network partners, plus consumer subscriptions, Google Play, and devices; Google Cloud earns from cloud platform and Workspace fees. Revenue grew from $182.53B in FY2020 to $402.84B in FY2025, with operating income rising from $41.22B to $129.04B. AI has become central—all 15 half-billion-user products use Gemini models, and Other Bets now includes revenue from autonomous transportation.

  2. ✓ 2. Competitive advantage

    Alphabet shows scale and strong raw financials: revenue grew from $182.53B in FY2020 to $402.84B in FY2025, operating income from $41.22B to $129.04B, and net income reached $132.17B in FY2025. The company cites strong brands, intellectual property, and advertising concentration (more than 70% of revenue from online advertising), but also describes formidable competition and low user switching costs. The sources do not provide computed margins or return ratios, but the combination suggests a durable, though contested, advantage.

  3. ✓ 3. 10-Q takeaways

    Q3 2026 revenue rose 25% YoY to $127.6B, led by Google Cloud +103% and Google Services +11%; operating income rose 30% to $40.6B with operating margin up 1pt to 32%. Net income fell 25% to $26.2B solely due to a swing in other income/expense from an unrealized gain to loss on equity securities. Cloud segment operating income nearly tripled to $11.1B; cash and short-term securities stood at $265.1B, with capex accelerating to $51.4B in the quarter. Buybacks decreased while debt and equity issuance financed growth; no new risk factor details were provided.

  4. ✓ 4. Corporate governance
  5. ✓ 5. Overview of the prior 3 years of 8-K filings
  6. ✓ 6. Other significant filings
  7. ✓ 7. Chronology of significant news and events
  8. ✓ 8. Comparables valuation interpretation
  9. ✓ 9. Insider trading interpretation
  10. ○ 10. Earnings-call notes
  11. ○ 11. Impression of the shareholder letter
  12. ○ 12. Scuttlebutt overview
  13. ✓ 13. Valuation and risk/reward summary
  14. ✓ 14. Current price suppression and potential catalysts

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