Alphabet (GOOGL) on Solana

Bill Ackman's Pershing Square Capital Management closed its entire position in Alphabet (GOOG/GOOGL) during the second quarter, a move that caught some observers off guard given the company's strong recent performance. The exit represents a notable shift in sentiment from one of the higher-profile hedge fund managers, who had previously held the stock as a core position.

Proceeds from the Alphabet sale were redeployed into two names Pershing Square views as lagging broader equities over the trailing twelve months: Meta Platforms, where the fund increased an existing stake, and Netflix, where it initiated a new position. The dual bet signals a rotation away from Alphabet's search-and-cloud story toward what the fund sees as undervalued franchises in social media AI and streaming.

Anthropic expects a second consecutive quarter of positive adjusted operating income, reporting gross margins above 80% before revenue sharing with distribution partners and model-training costs. For Alphabet, the headline is a direct infrastructure benefit: Anthropic's arrangement with Google covers 5 gigawatts of compute capacity beginning in 2027, making Anthropic one of the largest outside customers for Google Cloud and TPUs — infrastructure that also underpins Alphabet's own Gemini models.

Analysts caution, however, that Anthropic's lab-level adjusted metric should not be read as confirmation that every surrounding dollar of infrastructure earns a comparable return. If frontier model development slows or model pricing erodes faster than compute costs, the contracted capacity could take considerably longer to generate attractive margins for Alphabet. The relationship gives Google Cloud a meaningful revenue line and validates its AI infrastructure buildout, but the conversion from Anthropic's operating profitability to Alphabet shareholder value hinges on whether large-scale compute demand sustains the margins implied by current pricing.

Alphabet's custom Tensor Processing Unit (TPU) chip business is on track to generate over $50 billion annually in revenue, more than twice the size of its nearest competitor, according to Google Cloud CEO Thomas Kurian. Amazon's custom silicon operation reached a $25 billion run rate, leaving Microsoft further behind. The TPU segment alone now represents roughly half of Google Cloud's total quarterly revenue, underscoring how deeply Alphabet's AI infrastructure has become a standalone growth engine — one that ran 82% year-over-year.

The capital efficiency story is equally striking: TPU servers reach breakeven in approximately one year, versus nearly three years for comparable Amazon Web Services hardware, yielding roughly twice the cash returns over a six-year server lifespan. Despite that structural advantage, Alphabet trades at around 16 times forward earnings — a significant discount to Amazon at 20x and Microsoft at 25x — giving the stock room to reprice as the market factors in the compounding returns from its AI infrastructure lead.

Alphabet is projecting capital expenditures of $195–205 billion for 2026, with AI infrastructure as the primary driver, and early return metrics are bolstering the case for the outlay. Google Cloud CEO Thomas Kurian stated the aggregate payback period on Google's AI servers is under two years, with proprietary silicon achieving roughly half that timeframe. Google Cloud posted $24.77 billion in Q2 2026 revenue — up 82% year-over-year — while its contracted backlog reached $514 billion. Enterprise adoption of Gemini is also broad, with nearly 90% of Fortune 100 companies now using Gemini Enterprise.

Wall Street consensus sits at "Strong Buy" across 54 analysts, with Alphabet trading around 16x trailing and forward earnings and a sub-1.0 PEG ratio. Analysts view the aggressive capex as justified by durable growth fundamentals, particularly as infrastructure contracts typically run five years and customers have tended to increase spend — from roughly $100 million to over $150 million — as usage scales. Google's accelerator business is described as more than twice the size of the next-largest hyperscaler's, with 2.7x better price-to-performance for AI training and 80% superior inference performance cited as key competitive differentiators.

Alphabet's Waymo is expanding its paid driverless robotaxi service to Denver, San Diego, and Tampa, moves that would bring its total operational cities to 14. The rollout will proceed gradually in each new market. Waymo is also testing autonomous vehicles in Munich ahead of a planned commercial launch in Germany by late 2027.

Waymo holds a clear lead over Amazon's Zoox, which is still in testing phases in Houston and San Diego. Neither company has disclosed revenue targets, operating costs, or profitability expectations for the new markets, and analysts note that city count alone does not establish commercial viability — broad ridership adoption and sustainable unit economics remain the key unknowns.

Alphabet heads into September with a cluster of catalysts after wrapping up its longest monthly losing streak in more than a decade — a stretch marked by lost AI model momentum, high-profile talent departures, and a DeepMind restructuring. The company launched Gemini 3.8 Flash, its third Flash model in six weeks, which Google describes as its most capable programming and logic engine with improved multi-step processing over version 3.7. A security-focused variant, Gemini 3.8 Flash Cyber, was also introduced through the new Fairwind Program for corporate and government networks, where it reportedly outperforms both the 3.5 Flash Cyber and larger flagship models at identifying software vulnerabilities. Separately, federal Judge Leonie Brinkema rejected the Justice Department's push to force Google to divest its ad exchange, ordering behavioral remedies instead — the third successive setback for US antitrust authorities seeking structural breakups of major tech companies.

On the commercial side, Google Cloud CEO Thomas Kurial told CNBC that nearly three-quarters of Google Cloud customers are already using AI products and are spending roughly 50% more than their original commitments. Berkshire Hathaway CEO Greg Abel offered a public vote of confidence in Alphabet's AI positioning. Analyst Gil Luria of D.A. Davidson offered a more measured read: "From a product perspective, this model seems to keep Google in the race, but probably won't change the fact that they are a distant third in the enterprise market." The central question analysts are watching is whether Alphabet's accelerating AI investment translates into durable cloud revenue growth and returns that justify the infrastructure spend.

Berkshire Hathaway has elevated Alphabet (GOOGL) to its third largest portfolio position under new CEO Greg Abel, a notable institutional endorsement from the firm long associated with Warren Buffett's caution toward big tech. The repositioning came alongside a trim of Berkshire's Bank of America stake, with GOOGL currently trading around $335—down roughly 6% over the past 90 days but up nearly 59% over the trailing year and 149% over three years.

Analysts are sharply divided on whether Berkshire entered at a fair price. One bearish framework places Alphabet's intrinsic value at $202.62, implying the stock is approximately 65% overvalued and positioned to deliver minimal long-term returns. A competing DCF model from Simply Wall St estimates fair value at $446.49, suggesting meaningful upside from current levels. Both camps acknowledge shared risks: heavy AI capital expenditure commitments, ongoing regulatory restrictions across key business lines, and unresolved questions about execution on Alphabet's Gemini AI initiatives.

Alphabet's Q2 results offered three concrete catalysts supporting the analyst consensus "Strong Buy" rating and a consensus price target of $430.88, implying roughly 27% upside from current levels. AI Mode crossed 1 billion monthly active users globally, with management noting the feature is driving an incremental increase in overall Search queries — a direct counter to fears that AI tools would cannibalize advertising volume. Google Search and other advertising revenue rose 17% year-over-year to $63.3 billion, while total Google advertising revenue grew 14% to $81.6 billion.

Beyond advertising, Google Cloud posted $24.8 billion in quarterly revenue, up 82% year-over-year, with operating income tripling to $8.8 billion and margins expanding to 35.6% from 20.7% a year earlier. The Cloud backlog reached $514 billion, up $50 billion sequentially, with more than half expected to be recognized within 24 months. Subscription revenue — spanning YouTube Music and Premium, Google One, and newer AI subscription tiers — added $12.9 billion (+15% YoY), reducing overall dependence on ad cycles. GOOGL has gained roughly 8% year-to-date, trailing the S&P 500's 12.7%, which the bull case frames as an entry point ahead of sustained earnings momentum from Cloud and subscriptions.

Alphabet is navigating a convergence of regulatory and operational pressures. The U.S. Federal Trade Commission is finalizing a consumer protection investigation into YouTube, with a lawsuit reportedly in preparation over alleged deception regarding content policies and account suspension practices. Any enforcement action could impose new compliance requirements affecting how Alphabet manages user data across its ad-supported platforms. Separately, the company agreed to a $353.3 million settlement resolving a UK class action lawsuit over Play Store competition practices, easing legal overhang on its app store economics in British and broader European markets.

On the AI front, Alphabet is contending with leadership transitions and reported delays to upcoming Gemini model releases, raising questions about its competitive position at a moment when rivals are accelerating their own deployments across search, cloud, and productivity tools. Together, the regulatory costs and internal execution challenges add friction to a growth story that has leaned heavily on AI-driven demand across Search, Cloud, and YouTube.

Alphabet shares have fallen more than 15% from their May 2026 peak, erasing roughly $700 billion in market value as investors grow uneasy about the company's AI spending trajectory and its return on that investment. Contributing to the selloff: no major AI breakthrough to show for the outlay, the departure of a top scientist, a key AI researcher shifting roles, and delays to the newest Gemini model. Co-founder Sergey Brin has returned to day-to-day operations as part of an organizational reshuffle aimed at steadying the effort.

Despite leading the Magnificent 7 tech stocks for 16 months, Alphabet is now described by analysts as being on "shakier footing," with the market demanding clearer evidence that heavy AI infrastructure investment will translate into durable revenue gains. Analysts still credit the company with competitive advantages — a broad product suite and a long track record of AI R&D — but the near-term question of when elevated capex pays off is driving the stock lower and making cost trajectory the dominant investor concern.