Is Alphabet Stock a Buy Ahead of Earnings?

Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is scheduled to report first-quarter 2026 results on Wednesday, April 29, after the market closes. With a premium valuation going into the report after the stock's 18% rise over the past 30 days, investors shouldn't expect the market to ignore any weakness in the report.

Investors will be watching the report closely to see whether the company's latest results show that its enormous investments in artificial intelligence (AI) infrastructure are translating into faster growth -- particularly in Google Cloud -- without putting too much pressure on earnings per share.

Two metrics, therefore, seem especially important when Alphabet reports next week: earnings per share and Google Cloud's year-over-year revenue growth rate.

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An accelerating cloud computing business

Alphabet's cloud computing business, Google Cloud, is booming.

Google Cloud revenue rose 48% year over year in Q4 to $17.7 billion. That was a major acceleration from Q3, when Google Cloud revenue rose 34% year over year to $15.2 billion. And it wasn't just revenue growth that improved. Google Cloud's operating income more than doubled year over year in Q4 to $5.3 billion, with its operating margin expanding from 17.5% to 30.1%.

In addition, Alphabet CEO Sundar Pichai said its cloud backlog grew 55% sequentially to $240 billion, "representing a wide breadth of customers, driven by demand for AI products."

Google Cloud's performance was driven by enterprise AI products, including AI infrastructure from both TPUs and GPUs, as well as enterprise AI solutions tied to models like Gemini 3, explained chief financial officer Anat Ashkenazi during the call.

This is important because Google Cloud is becoming a much bigger part of Alphabet's story. For the full year, Google Cloud revenue increased from $43.2 billion in 2024 to $58.7 billion in 2025. Meanwhile, Google Cloud operating income increased from $6.1 billion to $13.9 billion.

Sure, with full-year Google Cloud operating income accounting for just about 11% of Alphabet's total operating income, it might seem unimportant, but given how fast the segment is growing and how much the company is investing in it, investors are watching it closely.

Pressured earnings

Alphabet plans to significantly ramp up spending to maintain its AI momentum. But investors shouldn't blame them, given the segment's extraordinary momentum.

Still, the spending spree the company plans is astounding.

Alphabet expects 2026 capital expenditures to be between $175 billion and $185 billion. For context, capital expenditures were $91.4 billion in 2025. This means management is planning to roughly double capital spending this year.

This spending, of course, may pay off handsomely if AI demand keeps rising and Google Cloud continues to gain momentum. But this level of investment also increases the stock's risk profile.

The biggest near-term concern is depreciation. Alphabet's chief financial officer said during the Q4 earnings call that depreciation increased 38% to $21.1 billion in 2025. She also said the company expects depreciation growth to accelerate in Q1 and "meaningfully increase" for the full year of 2026.

This is why Alphabet's earnings per share matters so much in the upcoming report. If Google Cloud growth accelerates again but earnings per share disappoints because infrastructure costs are rising faster than investors hoped, the stock could still take a hit.

Is Alphabet stock a buy?

So, is Alphabet stock a buy ahead of earnings?

There's no way to know how shares will move when the company reports. A strong Google Cloud number could excite investors. A weak earnings-per-share figure, or commentary suggesting that depreciation pressure could increase faster than benefits from Google Cloud growth could offset it, could do the opposite.

But over the long haul, shares do look attractive. Alphabet still has a dominant search business, YouTube, a fast-growing subscriptions business, and a cloud business that is scaling rapidly. Trading at about 32 times earnings, the stock isn't cheap. But for a company with Alphabet's competitive advantages and Google Cloud's recent acceleration, the valuation doesn't look unreasonable.

The caveat is that Alphabet is riskier than it used to be. A capital expenditure plan approaching $180 billion means management is making a huge bet that AI demand will remain durable and profitable. If that bet pays off, Alphabet's earnings could grow nicely over the next several years. If it doesn't, the stock's premium valuation could quickly become a problem.

Overall, I think Alphabet stock looks attractive for long-term investors. But given the scale of the company's spending plans, investors may want to keep any position in the stock moderate and watch next week's Google Cloud growth rate and earnings per share closely.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.