Goldman Sachs on Alphabet Inc. (GOOGL.US): Made by Google 2026 — Scaling Gemini Intelligence Across a Resilient Hardware Ecosystem
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Key Views
- Google's hardware (phones and wearables) continues to gain share steadily despite uncertain smartphone demand, albeit from a low base.
- On-device AI features, powered by custom silicon and multimodal generative models, are enhancing utility and expanding the range of tasks AI can execute.
- Across Google I/O, Marketing Live, and the Android Show, Goldman Sachs sees Alphabet favorably positioned in the AI-era consumer internet, shifting from pursuing absolute frontier research at all costs toward consolidating durable competitive advantages.
Outlook
Revenue is forecast at $432,987.1 million (12/26E), $548,830.4 million (12/27E), and $673,449.2 million (12/28E). Capex rises to $203,145.3 million in 12/26E and $349,896.0 million in 12/27E, driving 12/27E free cash flow negative at $(34,495.6) million (a (0.8)% FCF yield) before turning positive at $936.3 million in 12/28E. Key risks to the Buy rating include disruption to monetizable search, prolonged margin pressure from heavy investment, and regulatory scrutiny.