GOOGL · Forward model · Bear case
The Bear case, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Alphabet reports THREE segments — Google Services, Google Cloud, Other Bets — and splits Services into Search, YouTube ads, Network, and subscriptions/platforms/devices on the face of the release. This model copies those six operating lines plus hedging so the $119,796M reconciles. Do not fold Network into Search: it shrank 0.7% while Search grew 17%. Do not turn Gemini 950M MAU or 350M paid subscriptions into a subscription driver: they share a line with Pixel and Play. Do not turn Cloud backlog into MW. GAAP EPS $9.11 includes a $6.26 unrealised equity-security gain; the operating tell is $40,770M of operating income and −$5,855M of FCF. Segment 'EBITDA' is operating income plus an assumed D&A add-back; Alphabet does not publish D&A by segment. Capex $44,924M is charged mostly to Cloud at 140% of Cloud revenue. Alphabet-level activities $5,789M are 4.8% corporate overhead. netCash is cash+marketable $242,474M less LTD $98,165M. Diluted shares 12,309M. Hedging is FX noise held flat.
Search AI substitutes for queries, Cloud utilisation misses the $514B backlog, and capex stays elevated into 2028. What this case does NOT assume is a Chrome divestiture or a collapse of YouTube. It says 2026 was the peak growth year and the build does not earn its cost of capital.
Latest: $127.18B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $90.23B |
| 2025Q2 | $96.43B |
| 2025Q3 | $102.35B |
| 2025Q4 | $113.83B |
| 2026Q1 | $109.90B |
| 2026Q2 | $119.80B |
| 2026Q3E | $122.11B |
| 2026Q4E | $124.11B |
| 2027Q1E | $125.81B |
| 2027Q2E | $127.22B |
| 2027Q3E | $128.38B |
| 2027Q4E | $129.29B |
| 2028Q1E | $129.98B |
| 2028Q2E | $130.47B |
| 2028Q3E | $130.78B |
| 2028Q4E | $130.94B |
| 2029Q1E | $130.96B |
| 2029Q2E | $130.85B |
| 2029Q3E | $130.64B |
| 2029Q4E | $130.34B |
| 2030Q1E | $129.95B |
| 2030Q2E | $129.50B |
| 2030Q3E | $128.99B |
| 2030Q4E | $128.43B |
| 2031Q1E | $127.82B |
| 2031Q2E | $127.18B |
What drives each segment
Google Search & other
Growth pathAdvertising on Google Search and other Google properties. $63,271M in the basis quarter, 53% of the company, +17% year over year. Pichai says AI features are driving query growth. There is no published quarterly query or RPM series, so the driver is sequential growth on the disclosed line.
Latest: $59.71B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $50.70B |
| 2025Q2 | $54.19B |
| 2025Q3 | $56.57B |
| 2025Q4 | $63.07B |
| 2026Q1 | $60.40B |
| 2026Q2 | $63.27B |
| 2026Q3E | $63.85B |
| 2026Q4E | $64.28B |
| 2027Q1E | $64.59B |
| 2027Q2E | $64.77B |
| 2027Q3E | $64.86B |
| 2027Q4E | $64.85B |
| 2028Q1E | $64.77B |
| 2028Q2E | $64.61B |
| 2028Q3E | $64.39B |
| 2028Q4E | $64.12B |
| 2029Q1E | $63.81B |
| 2029Q2E | $63.45B |
| 2029Q3E | $63.06B |
| 2029Q4E | $62.64B |
| 2030Q1E | $62.19B |
| 2030Q2E | $61.72B |
| 2030Q3E | $61.24B |
| 2030Q4E | $60.74B |
| 2031Q1E | $60.23B |
| 2031Q2E | $59.71B |
Assumptions & reasoning
- Do not treat Search as dying. +17% on a $63B quarter is the print. The AI-substitution case is the bear, not the base.
- Google Services operating income $39,544M is not split among Search, YouTube, Network and subscriptions. The 44% EBITDA is assumed, not disclosed, on this line.
- Q4 is seasonally the strongest Search quarter ($63,073M in 2025 Q4 vs $56,567M in Q3). The projection is smooth; read the annual totals.
YouTube ads
Growth pathAdvertising on YouTube. $11,055M in the basis quarter, +13%. Direct response and brand, with living-room strength. Watch time is not a quarterly ARPU series, so the driver is sequential growth on the disclosed line.
Latest: $10.05B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $8.93B |
| 2025Q2 | $9.80B |
| 2025Q3 | $10.26B |
| 2025Q4 | $11.38B |
| 2026Q1 | $9.88B |
| 2026Q2 | $11.05B |
| 2026Q3E | $11.10B |
| 2026Q4E | $11.13B |
| 2027Q1E | $11.14B |
| 2027Q2E | $11.14B |
| 2027Q3E | $11.12B |
| 2027Q4E | $11.09B |
| 2028Q1E | $11.05B |
| 2028Q2E | $11.00B |
| 2028Q3E | $10.94B |
| 2028Q4E | $10.88B |
| 2029Q1E | $10.81B |
| 2029Q2E | $10.74B |
| 2029Q3E | $10.66B |
| 2029Q4E | $10.58B |
| 2030Q1E | $10.50B |
| 2030Q2E | $10.41B |
| 2030Q3E | $10.32B |
| 2030Q4E | $10.23B |
| 2031Q1E | $10.14B |
| 2031Q2E | $10.05B |
Assumptions & reasoning
- YouTube ads are not YouTube the franchise. Subscriptions sit on the other Services line. FY2025 YouTube ads-plus-subs exceeded $60B; that mix is not a vertical here.
- Q2 included World Cup viewership (1.7B unique viewers in the CEO quote). Opening 3% does not assume another event of that size.
- Same Services operating-income limitation as Search: 44% EBITDA is assumed because Alphabet does not split the P&L.
Google Network
Growth pathAds on partner sites and apps. $7,303M in the basis quarter, −0.7% year over year, the only shrinking advertising line. Kept separate so Search's +17% is not mixed with a partner-TAC decline.
Latest: $4.26B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $7.26B |
| 2025Q2 | $7.35B |
| 2025Q3 | $7.35B |
| 2025Q4 | $7.83B |
| 2026Q1 | $6.97B |
| 2026Q2 | $7.30B |
| 2026Q3E | $7.08B |
| 2026Q4E | $6.88B |
| 2027Q1E | $6.68B |
| 2027Q2E | $6.50B |
| 2027Q3E | $6.32B |
| 2027Q4E | $6.14B |
| 2028Q1E | $5.98B |
| 2028Q2E | $5.82B |
| 2028Q3E | $5.67B |
| 2028Q4E | $5.52B |
| 2029Q1E | $5.38B |
| 2029Q2E | $5.24B |
| 2029Q3E | $5.10B |
| 2029Q4E | $4.97B |
| 2030Q1E | $4.85B |
| 2030Q2E | $4.72B |
| 2030Q3E | $4.60B |
| 2030Q4E | $4.49B |
| 2031Q1E | $4.37B |
| 2031Q2E | $4.26B |
Assumptions & reasoning
- This is the line that would be hidden if advertising were one vertical. It has been flat-to-down for two years. Do not fold it into Search.
- 44% EBITDA is the Services blend and likely generous because TAC is concentrated here. The alternative is inventing a TAC split Alphabet does not publish.
Subscriptions, platforms & devices
Growth pathYouTube Premium, TV and Music, Google One, Play, Pixel and other consumer products. $12,911M in the basis quarter, +15%. Q1 2026: 350 million paid subscriptions. Devices and Play sit in the same line, so subscribers × ARPU would invent a mix.
Latest: $12.94B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $10.38B |
| 2025Q2 | $11.20B |
| 2025Q3 | $12.87B |
| 2025Q4 | $13.58B |
| 2026Q1 | $12.38B |
| 2026Q2 | $12.91B |
| 2026Q3E | $13.03B |
| 2026Q4E | $13.12B |
| 2027Q1E | $13.20B |
| 2027Q2E | $13.26B |
| 2027Q3E | $13.30B |
| 2027Q4E | $13.33B |
| 2028Q1E | $13.35B |
| 2028Q2E | $13.36B |
| 2028Q3E | $13.35B |
| 2028Q4E | $13.34B |
| 2029Q1E | $13.32B |
| 2029Q2E | $13.30B |
| 2029Q3E | $13.27B |
| 2029Q4E | $13.23B |
| 2030Q1E | $13.19B |
| 2030Q2E | $13.15B |
| 2030Q3E | $13.10B |
| 2030Q4E | $13.05B |
| 2031Q1E | $13.00B |
| 2031Q2E | $12.94B |
Assumptions & reasoning
- 350M paid subscriptions and Gemini App 950M MAU are not turned into a subscription driver. The line also has Pixel and Play. ARPU would be an invented mix.
- Inventory $9,991M vs $2,439M at year-end 2025. Device mix is real in this quarter and is why opening capex intensity is 12%.
- YouTube subscriptions sit here, YouTube ads sit next door. Do not double-count YouTube.
Google Cloud
Growth pathGCP, Workspace and, from Q2 2026, TPU system sales. $24,768M in the basis quarter, +82%, sequential +24% from Q1 $20,028M. Operating income $8,814M, margin 35.6% vs 20.7% a year ago. Backlog ~$514B is contracted work, not live MW. No utilisation series, so sequential growth on the filed total.
Latest: $39.81B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $12.26B |
| 2025Q2 | $13.62B |
| 2025Q3 | $15.16B |
| 2025Q4 | $17.66B |
| 2026Q1 | $20.03B |
| 2026Q2 | $24.77B |
| 2026Q3E | $26.56B |
| 2026Q4E | $28.22B |
| 2027Q1E | $29.73B |
| 2027Q2E | $31.09B |
| 2027Q3E | $32.31B |
| 2027Q4E | $33.41B |
| 2028Q1E | $34.37B |
| 2028Q2E | $35.23B |
| 2028Q3E | $35.97B |
| 2028Q4E | $36.63B |
| 2029Q1E | $37.20B |
| 2029Q2E | $37.69B |
| 2029Q3E | $38.12B |
| 2029Q4E | $38.49B |
| 2030Q1E | $38.81B |
| 2030Q2E | $39.08B |
| 2030Q3E | $39.31B |
| 2030Q4E | $39.51B |
| 2031Q1E | $39.67B |
| 2031Q2E | $39.81B |
Assumptions & reasoning
- Do not use 24% sequential as the opening rate. That quarter includes first TPU system sales. 10% QoQ is already a very fast cloud.
- Backlog ~$514B is call-only and is remaining performance obligation, not capacity in MW. It is the named case, not a capacity driver.
- Cloud FCF is deeply negative at 50% EBITDA minus 140% capex. That is the point of the model, not a bug. 2027 capex is guided higher, so intensity glides slowly.
- Segment operating income is disclosed at 35.6%. D&A by segment is not. The 50% EBITDA is assumed as operating income plus most of company D&A.
Other Bets
Growth pathWaymo autonomous rides and other bets. $382M in the basis quarter, +2%, operating loss $1,799M. Waymo surpassed 500,000 fully autonomous rides a week in Q1 2026. That is not a disclosed dollar path, so sequential growth on the tiny filed total.
Latest: $342M (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $450M |
| 2025Q2 | $373M |
| 2025Q3 | $344M |
| 2025Q4 | $370M |
| 2026Q1 | $411M |
| 2026Q2 | $382M |
| 2026Q3E | $380M |
| 2026Q4E | $378M |
| 2027Q1E | $376M |
| 2027Q2E | $374M |
| 2027Q3E | $372M |
| 2027Q4E | $370M |
| 2028Q1E | $368M |
| 2028Q2E | $366M |
| 2028Q3E | $364M |
| 2028Q4E | $362M |
| 2029Q1E | $360M |
| 2029Q2E | $358M |
| 2029Q3E | $356M |
| 2029Q4E | $354M |
| 2030Q1E | $352M |
| 2030Q2E | $350M |
| 2030Q3E | $348M |
| 2030Q4E | $346M |
| 2031Q1E | $344M |
| 2031Q2E | $342M |
Assumptions & reasoning
- Do not add a delayed Waymo vertical. Rides per week are disclosed; dollars per ride are not. Other Bets remains $382M.
- Q4 2025 operating loss $3,617M included a $2.1B Waymo employee compensation charge. Q2 $1,799M is the cleaner run-rate hole.
- This line cannot move group fair value much. It is carried because Alphabet reports it and because folding it into Cloud would flatter Cloud.
Hedging
Growth pathForeign-exchange hedging gains and losses on revenue, not allocated to segments. $106M in the basis quarter after $(180)M in Q1. Required so the seven lines sum to $119,796M. Held flat at the last print with no economics.
Latest: $64M (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $260M |
| 2025Q2 | -$112M |
| 2025Q3 | -$207M |
| 2025Q4 | -$68M |
| 2026Q1 | -$180M |
| 2026Q2 | $106M |
| 2026Q3E | $103M |
| 2026Q4E | $101M |
| 2027Q1E | $98M |
| 2027Q2E | $96M |
| 2027Q3E | $93M |
| 2027Q4E | $91M |
| 2028Q1E | $89M |
| 2028Q2E | $87M |
| 2028Q3E | $84M |
| 2028Q4E | $82M |
| 2029Q1E | $80M |
| 2029Q2E | $78M |
| 2029Q3E | $76M |
| 2029Q4E | $74M |
| 2030Q1E | $73M |
| 2030Q2E | $71M |
| 2030Q3E | $69M |
| 2030Q4E | $67M |
| 2031Q1E | $66M |
| 2031Q2E | $64M |
Assumptions & reasoning
- Included only so vertical totals match consolidated revenue. Folding $106M into Search would hide a disclosed line.
- The projection holds $106M a quarter. Individual future quarters will not look like that. It does not matter to fair value.
Where each case comes from
Cloud backlog case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Cloud backlog column is what happens if they are taken at face value.
Alphabet Q2 2026 earnings release and call, 22 July 2026
- Jul 22, 2026 Google Cloud saw a meaningful acceleration in growth as revenues increased 82% to $24.8 billion, led by an increase in Google Cloud Platform (GCP) across enterprise AI Solutions and enterprise AI Infrastructure, as well as core GCP services.
- Jul 22, 2026 Q2 was an amazing quarter, with Alphabet revenues growing 24% year-over-year and Google Cloud revenues accelerating to 82% growth, driven by demand for AI infrastructure and AI solutions.
- Apr 29, 2026 Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion.
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $32.09B |
| Terminal-year revenue | $512.41B |
| Terminal-year EBITDA | $158.58B |
| Exit multiple, on revenue | 4.0x |
| Terminal value | $2.05T |
| Discounted at 11.0% a year, terminal value becomes | $1.22T |
| Enterprise value | $1.25T |
| Net cash | $144.31B |
| Equity value | $1.39T |
| Shares | 12.31B |
| Fair value per share | $113.15 |
| Against the current price of $340.65 | -67% |
9% is a point above Microsoft's 8.5%: FCF went negative this quarter, 2027 capex is guided higher, and the stock is dual-class. Exit 6.5x terminal-year revenue vs about 9.3x TTM $446B today. Microsoft's model uses 7x. At $348.06 on 12.309B diluted shares the equity is ~$4.28T; net cash $144B puts EV ~$4.14T. Move the exit multiple and Cloud's opening growth before anything else. GAAP EPS is not the tell: $6.26 of the $9.11 is an unrealised equity mark.
Read the other way round: at $340.65 the market is paying 13.2x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Google Search & other | YouTube ads | Google Network | Subscriptions, platforms & devices | Google Cloud | Other Bets | Hedging | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $63.85B | $11.10B | $7.08B | $13.03B | $26.56B | $380M | $103M | $122.11B | +19% | $37.59B | $43.98B | -$6.38B | +14 | -$6.22B |
| 2026 Q4E | $64.28B | $11.13B | $6.88B | $13.12B | $28.22B | $378M | $101M | $124.11B | +9% | $38.24B | $43.65B | -$5.42B | +5 | -$5.14B |
| 2027 Q1E | $64.59B | $11.14B | $6.68B | $13.20B | $29.73B | $376M | $98M | $125.81B | +14% | $38.78B | $43.11B | -$4.33B | +11 | -$4.00B |
| 2027 Q2E | $64.77B | $11.14B | $6.50B | $13.26B | $31.09B | $374M | $96M | $127.22B | +6% | $39.24B | $42.39B | -$3.15B | +4 | -$2.84B |
| 2027 Q3E | $64.86B | $11.12B | $6.32B | $13.30B | $32.31B | $372M | $93M | $128.38B | +5% | $39.61B | $41.53B | -$1.92B | +4 | -$1.69B |
| 2027 Q4E | $64.85B | $11.09B | $6.14B | $13.33B | $33.41B | $370M | $91M | $129.29B | +4% | $39.90B | $40.58B | -$676M | +4 | -$578M |
| 2028 Q1E | $64.77B | $11.05B | $5.98B | $13.35B | $34.37B | $368M | $89M | $129.98B | +3% | $40.12B | $39.55B | $450M | +4 | $375M |
| 2028 Q2E | $64.61B | $11.00B | $5.82B | $13.36B | $35.23B | $366M | $87M | $130.47B | +3% | $40.29B | $38.49B | $1.42B | +4 | $1.15B |
| 2028 Q3E | $64.39B | $10.94B | $5.67B | $13.35B | $35.97B | $364M | $84M | $130.78B | +2% | $40.39B | $37.41B | $2.35B | +4 | $1.86B |
| 2028 Q4E | $64.12B | $10.88B | $5.52B | $13.34B | $36.63B | $362M | $82M | $130.94B | +1% | $40.45B | $36.33B | $3.25B | +4 | $2.51B |
| 2029 Q1E | $63.81B | $10.81B | $5.38B | $13.32B | $37.20B | $360M | $80M | $130.96B | +1% | $40.46B | $35.26B | $4.11B | +4 | $3.08B |
| 2029 Q2E | $63.45B | $10.74B | $5.24B | $13.30B | $37.69B | $358M | $78M | $130.85B | +0% | $40.44B | $34.22B | $4.91B | +4 | $3.59B |
| 2029 Q3E | $63.06B | $10.66B | $5.10B | $13.27B | $38.12B | $356M | $76M | $130.64B | +0% | $40.38B | $33.21B | $5.66B | +4 | $4.03B |
| 2029 Q4E | $62.64B | $10.58B | $4.97B | $13.23B | $38.49B | $354M | $74M | $130.34B | +0% | $40.29B | $32.24B | $6.36B | +4 | $4.41B |
| 2030 Q1E | $62.19B | $10.50B | $4.85B | $13.19B | $38.81B | $352M | $73M | $129.95B | -1% | $40.18B | $31.31B | $7.01B | +5 | $4.74B |
| 2030 Q2E | $61.72B | $10.41B | $4.72B | $13.15B | $39.08B | $350M | $71M | $129.50B | -1% | $40.05B | $30.43B | $7.60B | +5 | $5.01B |
| 2030 Q3E | $61.24B | $10.32B | $4.60B | $13.10B | $39.31B | $348M | $69M | $128.99B | -1% | $39.90B | $29.59B | $8.14B | +5 | $5.23B |
| 2030 Q4E | $60.74B | $10.23B | $4.49B | $13.05B | $39.51B | $346M | $67M | $128.43B | -1% | $39.74B | $28.80B | $8.64B | +5 | $5.40B |
| 2031 Q1E | $60.23B | $10.14B | $4.37B | $13.00B | $39.67B | $344M | $66M | $127.82B | -2% | $39.56B | $28.06B | $9.09B | +5 | $5.54B |
| 2031 Q2E | $59.71B | $10.05B | $4.26B | $12.94B | $39.81B | $342M | $64M | $127.18B | -2% | $39.38B | $27.36B | $9.49B | +6 | $5.63B |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-25 | all | $311.82 | Initial model. Seven verticals on the disclosed revenue lines so $119,796M reconciles, basis the June quarter, Cloud +82% the claim, Cloud backlog the named case. |