Alphabet’s $28.7 Billion Accounting Gain: The Battle Between Skeptics and Believers
26.05.2026 - 12:33:17 | boerse-global.de
Alphabet’s first-quarter earnings for 2026 look like a blowout on the surface — net income surged 81% to $62.58 billion. But peel back the headline, and the picture gets muddier. Nearly half of that profit — $28.7 billion, or 46% of the total — came from unrealized book gains on the company’s stake in AI startup Anthropic. That accounting windfall masks a far more mixed operating reality, and investors are deeply split on where the stock goes from here.
Nowhere is that divide starker than in the moves of two heavyweight investors. Stanley Druckenmiller sold his entire Alphabet position — worth more than $120 million — citing valuation concerns as the forward price-to-earnings ratio climbed from roughly 15 at the start of 2025 to 27 today. He has redirected capital into Intel and Arm Holdings, betting on “agentic AI” systems that can handle complex tasks autonomously. On the other side, Berkshire Hathaway under Greg Abel tripled its Alphabet stake in the first quarter, vaulting the stock into Berkshire’s top five holdings. Abel is betting big on the cloud business.
That cloud segment is indeed delivering. Revenue hit a record $20 billion in the quarter, up 63% year over year, and operating profit tripled. To sustain that momentum, Alphabet is pouring capital into infrastructure: planned investments of up to $190 billion for the full year 2026, double last year’s level. The company’s order backlog of more than $460 billion provides a solid funding base, and the next quarterly dividend of $0.22 per share is due in June.
Should investors sell immediately? Or is it worth buying Alphabet?
But the spending spree comes as Alphabet tries to stay competitive in AI pricing. The Gemini models were cut by 20%, and at Google I/O the company unveiled Gemini Flash 3.5 as a cost-efficient alternative. More dramatically, the search interface is undergoing its first fundamental redesign in 25 years, with “Antigravity” for AI orchestration and “Gemini Omni” set to reshape how users interact with the platform. These aren’t cosmetic changes — they are defensive moves against rising competition.
Wall Street remains broadly bullish. Twenty-six analysts rate the stock a buy, seven a hold, and none a sell. Price targets range from $305 to $400, reflecting the same uncertainty that pits Druckenmiller against Berkshire. The shares are trading at €331.50, up more than 120% over the past year and just shy of the 52-week high of €344.60. The relative strength index sits at 62, suggesting no overheating.
For now, Alphabet’s massive AI bet hinges on whether the cloud and search upgrades can turn that $28.7 billion accounting gain into sustainable real-world earnings. The market is watching — and betting on two very different answers.
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