Google Cloud Has Become Alphabet’s (GOOG) Primary Valuation Driver

4 weeks ago 6

Soumya Eswaran

Fri, July 31, 2026 astatine 8:42 AM CDT 3 min read

Investment absorption company Vulcan Value Partners recently released its second-quarter 2026 capitalist letter. A transcript of the missive tin beryllium downloaded here. Vulcan Value Partners prioritizes semipermanent returns and little hazard implicit short-term performance. In the quarter, the Large Cap Composite (Net) returned 9.5%, the Small Cap Composite (Net) returned 13.3%, the Focus Composite (Net) returned 10.4%, the Focus Plus Composite (Net) returned 10.5%, and the All-Cap Composite (Net) returned 9.0%. The steadfast reported beardown compounding crossed its strategies successful Q2 2026. Management highlighted that their exceptional holdings stay profoundly undervalued comparative to "what is working" successful the market, viewing this arsenic an fantabulous accidental for diligent investors. In addition, delight cheque the Firm's apical 5 holdings to cognize its champion picks successful 2026.

In its Q2 2026 capitalist letter, Vulcan Value Partners highlighted Alphabet Inc. (NASDAQ:GOOG) arsenic a starring show contributor. Alphabet Inc. (NASDAQ:GOOG), the genitor institution of Google, offers assorted platforms and services, including online hunt and advertising, unreality solutions, and artificial intelligence. On July 30, 2026, Alphabet Inc. (NASDAQ:GOOG) closed astatine $333.68 per share, reflecting a marketplace capitalization of $4.08 trillion. Alphabet Inc. (NASDAQ:GOOG) posted a one-month instrumentality of -6.32%, portion its shares gained 75.67% implicit the past 52 weeks.

Vulcan Value Partners stated the pursuing regarding Alphabet Inc. (NASDAQ:GOOG) successful its Q2 2026 capitalist update:

"Alphabet Inc. (NASDAQ:GOOG) delivered robust results during the archetypal quarter. Core Google Search gross accelerated to 19%, the fastest maturation successful 16 quarters. AI continues to beryllium an expansionary infinitesimal for hunt arsenic hunt queries are astatine an all-time high. Google Cloud gross maturation accelerated to 63%, the fastest maturation complaint it has ever reported. Google Cloud margins expanded to 33%, up from 18% successful the archetypal 4th of 2025. Google Cloud backlog grew 5X year-over-year with maturation driven by endeavor AI offerings and TPU sales. While we person ever had precocious expectations for Google's Cloud business, its show implicit the past respective years has simply been astonishing. Google Cloud is present astir 40% of our worth for the company. As a reminder, 2023 was the archetypal twelvemonth that Google Cloud posted affirmative EBIT. Consensus estimates for Google Cloud 2027 EBIT are $54BN, a stark opposition to the antagonistic EBIT borderline concern astatine $26BN of gross successful 2022. Thomas Kurian, CEO of Google Cloud, and Alphabet's full enactment squad merit a circular of applause. We proceed to show the AI disruption risks crossed each of our portfolio companies and MVP businesses."

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