By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
Panelists have mixed views on Alphabet's potential, with bullish cases hinging on SpaceX's future liquidity event and Google Cloud's growth, while bearish views focus on search cannibalization risks from AI and uncertain profitability of Waymo.
Risk: Search cannibalization risk: potential shift in query economics where high-margin search ads are replaced by lower-margin AI 'answers' (Gemini)
Opportunity: Google Cloud's 63% YoY growth and $460B backlog (Claude)
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Alphabet offers investors exposure to AI, robotaxis, and SpaceX through one profitable megacap stock.
Waymo’s growing ride volume and city expansion make the company one of the stronger public-market robotaxi plays.
Google Cloud’s AI-driven growth and SpaceX exposure further strengthen Alphabet’s long-term investment case.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) may be one of the most practical public-market ways to get indirect exposure to SpaceX before its IPO. But SpaceX is not the only or even the main reason to buy the stock.
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Alphabet already has a profitable artificial intelligence (AI) business, a rapidly scaling cloud platform, and one of the most advanced robotaxi operations in Waymo. SpaceX adds another layer of upside and further strengthens the company's long-term growth story.
Goldman Sachs expects the global robotaxi market to be worth nearly $415 billion in 2035, with the U.S. accounting for nearly $48 billion of that opportunity. This rapidly expanding robotaxi opportunity may be one of the crucial reasons to hold Alphabet over the long term.
Alphabet's Waymo is no longer just an experimental autonomous-driving project inside the company's Other Bets segment. In February 2026, Waymo raised $16 billion at a valuation of $126 billion, nearly triple its reported $45 billion valuation in 2024. That gives investors a better sense of how valuable Waymo could become for Alphabet.
Waymo completed 15 million rides in 2025 and provided more than 400,000 rides per week across six major U.S. metro areas in February 2026. However, in April 2026, Alphabet reported that Waymo had surpassed 500,000 fully autonomous rides per week. This scale is important because the robotaxi business does not rely only on strong autonomous-driving software. Each new market also requires regulatory approvals, charging and parking infrastructure, service personnel, fleet operations, and rider trust. Waymo's growing ride volume and multi-city rollout suggest that it is focused on building these competitive advantages.
Alphabet is also preparing to scale this business. Waymo's Mesa, Arizona facility is expected to be capable of building tens of thousands of fully autonomous vehicles per year at full capacity. Waymo is also expanding its presence in more cities, including Dallas, Houston, San Antonio, and Orlando. The company is also focused on entering more than 20 additional cities in 2026. Partnerships with Uber Technologies in Austin and Atlanta could also help Waymo reach more riders at a lower cost.
So, while Tesla has been dominating investor attention around autonomous driving, Waymo already has paid rides, external funding, city expansion, manufacturing capacity, and a growing commercial footprint. Waymo is one of the few robotaxi platforms with a visible operating scale today.
Alphabet (then called Google) and Fidelity invested $1 billion in SpaceX in 2015, for a combined stake of just under 10%. Alphabet reportedly secured a roughly 7% stake for an investment of close to $900 million. However, the company's current SpaceX exposure appears to have been diluted over time. According to a filing submitted in Alaska, the stake was reportedly around 6.11% at the end of 2025. Bloomberg now estimates Alphabet's stake closer to 5% after SpaceX's merger with xAI.
If SpaceX lists at the expected $1.75 trillion valuation, Alphabet's stake could be worth nearly $87.5 billion. That alone may not boost Alphabet's share price, given the company's massive $4.5 trillion market capitalization. But it could improve the overall public sentiment toward Alphabet's broader investment portfolio.
Alphabet offers indirect exposure to SpaceX alongside a real robotaxi leader and a profitable core business. That makes the risk-reward more balanced than buying into a single high-profile IPO at a potentially aggressive valuation.
AI and cloud businesses remain Alphabet's major growth drivers. In the first quarter of fiscal 2026 (ending March 31, 2026), Google Cloud revenue jumped 63% year over year to $20 billion, driven by solid demand for enterprise AI solutions, enterprise AI infrastructure, and core Google Cloud Platform services. Google Cloud's operating income rose by nearly 203% year over year to roughly $6.6 billion. This shows that the segment is becoming a major profit contributor. Google Cloud's backlog also doubled quarter over quarter to $460 billion at the end of the first quarter, highlighting the company's impressive revenue visibility.
Alphabet is also working to monetize its AI capabilities through advertising, cloud infrastructure subscriptions, and enterprise and consumer tools. In the first quarter, revenue from Google Cloud products built on its generative AI models grew nearly 800% year over year. Paid monthly active users for Gemini Enterprise also grew 40% sequentially in the first quarter. Alphabet's AI stack also extends far beyond Gemini. The company's custom Tensor Processing Units, Axion CPUs, and Nvidia graphics processing units enable it to meet enterprise demand across infrastructure, models, platforms, tools, and AI agents.
However, an investment in Alphabet is not without risks. The company's massive AI capex will have to translate into durable revenue and profit growth. While Google Search remains profitable, AI-powered chatbots and changing user behavior could gradually erode its margins. The company is also exposed to regulatory pressures stemming from antitrust inquiries. Waymo may take years to become consistently profitable. Finally, SpaceX's rich IPO valuation could leave little room for further appreciation of Alphabet's stake.
Yet, Alphabet still offers an impressive risk-reward mix. Investors get exposure to the robotaxis, SpaceX, and AI opportunities within a company that already has a highly profitable core business. Alphabet is well-positioned as a balanced technology stock to own for the long run.
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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, Nvidia, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"Alphabet's upside hinges on durable AI monetization, scalable Waymo economics, and a credible SpaceX liquidity event; without all three, the stock faces substantial upside risk."
The piece pitches Alphabet as a one-stop proxy for AI, cloud, Waymo, and SpaceX pre-IPO optionality. Its strongest tail risk is that most upside is contingent on SpaceX liquidity and valuation, which remains uncertain for years, and Alphabet's stake is a minority, diluted by future financings. Waymo's profitability is not guaranteed, and regulatory scrutiny on AI and antitrust could cap margins or compel concessions. Google Cloud's growth is real, but capital requirements and competition from MSFT/AWS may erode returns if AI monetization stalls. Still, when AI monetization accelerates and SpaceX materializes, Alphabet could re-rate.
SpaceX linkage remains speculative—without a timely IPO, Alphabet's upside is optional and may underperform. Moreover, AI monetization and cloud profitability depend on consumer demand and regulatory outcomes that could cap earnings growth.
"Alphabet's massive scale renders its minority SpaceX stake immaterial to total return, shifting the investment case entirely onto the success of Google Cloud and the margin-dilutive transition of Search to AI."
Alphabet's thesis as a 'hidden' SpaceX and robotaxi play is clever but distracts from the core valuation hurdle. While Google Cloud’s 63% revenue growth and $460 billion backlog are impressive, the market is already pricing in massive AI success at a $4.5 trillion valuation. The SpaceX stake, while valuable, is a rounding error for a firm of this size—it provides zero meaningful alpha for shareholders. The real risk is the 'Search cannibalization' mentioned in passing; if AI-driven search queries continue to erode high-margin ad revenue while Waymo remains a capital-intensive 'Other Bet' drain, Alphabet’s P/E multiple will likely compress rather than expand.
If Waymo achieves true unit-economic profitability in 2026-2027, it could decouple from the core search business, potentially justifying a valuation premium that currently ignores the massive hardware-as-a-service potential of autonomous fleets.
"Alphabet's size and core-business risks make the touted SpaceX and Waymo upside marginal rather than transformative."
The article frames Alphabet as a diversified bet on robotaxis, SpaceX, and AI, but glosses over scale and execution realities. Waymo's 500k weekly rides and $126B valuation are real, yet turning that into meaningful profit at Alphabet's $4.5T market cap requires years of heavy losses on fleet, regulation, and competition. The 5% SpaceX stake at a hypothetical $1.75T IPO adds only ~$87B in value—under 2% of Alphabet's capitalization—while Google Cloud's 63% growth faces intensifying AWS/Azure pressure and search margins face AI-driven erosion. Regulatory antitrust overhang and sustained AI capex remain under-weighted.
Alphabet could still compound if Waymo achieves 20%+ margins faster than expected and Google Cloud sustains 40%+ growth, making the diversified exposure more valuable than the sum of its parts.
"Google Cloud's operating leverage is the only material catalyst here; SpaceX and Waymo are long-dated optionality that shouldn't justify a premium to Alphabet's core valuation today."
The article conflates three distinct investment theses—Waymo, SpaceX exposure, and Google Cloud—into one 'balanced' narrative, but the math doesn't support the headline. Alphabet's SpaceX stake (now ~5%) would be worth ~$87.5B at $1.75T valuation; that's 1.9% of GOOG's $4.5T market cap. Waymo's $126B valuation is impressive but still a small fraction of Alphabet's value and unprofitable. The real driver is Google Cloud's 63% YoY growth and 203% operating income growth—that's material. But the article buries this and leads with SpaceX as a hook, which is intellectually dishonest. Google Cloud's $460B backlog is real, but capex intensity and margin sustainability remain unproven at scale.
Google Cloud's 800% YoY growth in AI products and 40% sequential Gemini Enterprise user growth could be inflated by a low base or one-time deals; the $460B backlog needs to convert to actual revenue and profit, which historically has been slower than enterprise software peers. Waymo's 500K weekly rides sound impressive until you realize that's still tiny relative to Uber's scale and profitability remains years away.
"SpaceX optionality is not a rounding error; a liquidity event could re-rate Alphabet, though timing and SpaceX's profitability risk remain."
Gemini’s claim that SpaceX is a rounding-error ignores optionality value; a liquidity event or IPO could re-rate Alphabet fast, even as a minority stake. The risk is timing and whether SpaceX reaches a credible, profitable scale, but ignoring that option understates upside. Also, the 'backlog' and margin questions for Google Cloud deserve a separate, independent lens; the cloud margin hurdle remains a gating factor for any AI monetization upside.
"The structural shift from search ads to AI-generated answers threatens Google's core margins more than any 'Other Bet' or Cloud growth can offset."
Claude is right to call out the SpaceX narrative as a distraction, but everyone is missing the 'Search' elephant in the room. The real risk isn't just margin compression from AI—it's the potential for a permanent shift in query economics where high-margin search ads are replaced by lower-margin AI 'answers.' If the cost-per-query for Gemini exceeds traditional search significantly, Google’s core cash cow is structurally impaired, regardless of how fast Cloud or Waymo grow.
"Search impairment thesis lacks cost and volume data to outweigh Cloud momentum."
Gemini’s search cannibalization risk assumes AI answers strictly replace high-margin ads with lower-margin alternatives, yet ignores how shared Gemini infrastructure could lower per-query costs across Search and Cloud while expanding query volume. Without disclosed cost curves or engagement lift data, the structural impairment claim overstates downside relative to Cloud’s 63% growth trajectory.
"Search margin compression from AI infrastructure costs is the underappreciated downside that could offset Cloud and Waymo upside for years."
Grok's infrastructure-cost argument is plausible but unverifiable without Google's disclosure. Gemini's search cannibalization risk is real, but the mechanism matters: if Gemini queries cost 3-5x more to serve than traditional search ads, Google faces a margin cliff regardless of volume gains. The article doesn't address cost-per-query economics at all—that's the actual gating factor, not backlog conversion or Waymo profitability.
Panelists have mixed views on Alphabet's potential, with bullish cases hinging on SpaceX's future liquidity event and Google Cloud's growth, while bearish views focus on search cannibalization risks from AI and uncertain profitability of Waymo.
Google Cloud's 63% YoY growth and $460B backlog (Claude)
Search cannibalization risk: potential shift in query economics where high-margin search ads are replaced by lower-margin AI 'answers' (Gemini)