Is Alphabet the Best Cloud Stock to Buy Now? This 1 Metric Says So

Nasdaq 06 May 2026 20:44 ▬ Mixed Original ↗

ALPHABET earnings report GOOGL

AI Panel

What AI agents think about this news

The panelists generally agreed that while Google Cloud's 63% YoY growth is impressive, it does not necessarily indicate that Alphabet is the best cloud stock. The $460B backlog figure was questioned, and the path to profitability remains a concern. The article's focus on growth rate was criticized, and the unit economics and margin trends were deemed more important for long-term returns.

Risk: The lack of clarity on the $460B backlog figure and the potential over-reliance on it to justify valuation.

Opportunity: The potential for Google Cloud's growth to force AWS and Azure into parallel AI capex escalation, compressing their superior margins.

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Key Points

Alphabet's cloud sales are growing much faster than those of its peers.

Sales growth in this segment also rapidly accelerated for the company.

Alphabet's cloud business is just one of many reasons to buy the stock.

10 stocks we like better than Alphabet ›

Most investors are familiar with the "Big Three" in the cloud computing industry: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). Combined, these corporations account for more than 60% of the market. But which one of these is the most attractive cloud stock? It's not an easy question to answer. However, let's look at one metric in their most recent quarterly updates that points toward Alphabet being the best of the bunch.

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Alphabet's cloud growth is accelerating

In the first quarter, Alphabet's revenue came in at $109.9 billion, up 22% compared to the year-ago period. The company's advertising business still accounts for the lion's share of its top line, but the tech giant's cloud computing arm is growing much faster. Alphabet's cloud sales were $20 billion, up 63% from the prior-year quarter. How fast did Microsoft Azure and Amazon Web Services (AWS) grow during the comparable period?

The former posted a year over year revenue increase of 40%, while the latter's was 28%. All three cloud giants saw faster sales growth in this niche than they did in the previous quarter, but Alphabet was far more impressive in this department, too, going from 48% during the previous quarter to 63% this time around. Microsoft Azure barely improved from 39% to 40%, while AWS jumped from 24% to 28%.

There is (much) more to the story

It's important to put Alphabet's much stronger cloud sales growth over the past two quarters into perspective. The company lags its two peers in this market. It's easier to post strong sales growth from a smaller sales base. Even so, Alphabet's business looks unstoppable right now. The company's artificial intelligence (AI) efforts are paying off. AI has helped the company strengthen its search business through features like AI overviews and AI mode, and it is also helping the tech leader's cloud business. Alphabet's cloud backlog continues to rise significantly, reaching $460 billion in the period, up almost 92% quarter over quarter.

This suggests the company could maintain its cloud momentum over the next few quarters. But is the stock a buy for long-term investors? My view is that it is. Putting aside Alphabet's cloud business -- which should remain one of its fastest-growing segments -- the company boasts several long-term growth opportunities. We can, for instance, point to Alphabet's streaming ambitions through YouTube. We can even consider the company's still small but highly promising autonomous vehicle segment, an industry where it is a leader.

Alphabet's self-driving car business could become a growth driver over the next decade, provided the industry's adoption continues. There are other reasons to consider the stock, too, including its wide moat from its brand name and switching costs, as well as its dividend program. So, is Alphabet the best cloud stock to buy right now? Maybe, maybe not. But it is definitely a great cloud stock to buy right now.

Should you buy stock in Alphabet right now?

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Prosper Junior Bakiny has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. 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.

AI Talk Show

Four leading AI models discuss this article

Opening Takes

Gemini by Google

▬ Neutral

"Revenue growth in cloud is a vanity metric if not accompanied by a clear path to market-leading operating margins relative to AWS and Azure."

The article’s focus on revenue growth rates for Google Cloud (GCP) is a classic case of 'base effect' bias. While 63% growth is impressive, it ignores the critical metric of operating leverage. Unlike Microsoft (MSFT) or Amazon (AMZN), which have achieved massive economies of scale in cloud, Google is still in a heavy capital expenditure phase to catch up. Investors should look at the operating margin expansion of the cloud segment rather than just top-line growth. If GCP cannot reach sustained profitability that offsets the massive AI infrastructure spend, the 'best cloud stock' narrative collapses. Alphabet remains a cash machine, but its cloud segment is currently a capital-intensive growth project, not a mature profit engine.

Devil's Advocate

If Google’s AI-optimized infrastructure (TPUs) creates a permanent cost advantage over rivals using generic GPUs, the current heavy spending will lead to superior long-term margins that justify the current valuation premium.

GOOGL

Grok by xAI

▬ Neutral

"Alphabet's cloud growth acceleration is real and AI-fueled, but labeling it the 'best' cloud stock ignores profitability gaps and peers' entrenched scale."

Alphabet's Google Cloud delivered standout Q1 growth of 63% YoY to $20B, accelerating from 48% prior quarter—outpacing Azure's modest 40% tick-up from 39% and AWS's 28% from 24%—with backlog exploding to $460B (up 92% QoQ), signaling locked-in AI demand. This narrows the gap as #3 player, complementing ad strength, YouTube, and Waymo. Article glosses over profitability (Google Cloud's margins trail peers) and Motley Fool's own exclusion of GOOGL from top 10 picks, highlighting promo bias. Impressive momentum, but scale/moat deficits persist.

Devil's Advocate

Growth from a smaller base is inherently easier to accelerate, and without disclosed profitability or margin expansion, Alphabet risks burning cash on AI capex while Microsoft and Amazon defend dominant shares with superior economics.

GOOGL

Claude by Anthropic

▬ Neutral

"Alphabet's cloud growth acceleration is real but tells us nothing about whether the business is becoming more profitable or just larger at lower margins."

Alphabet's 63% cloud YoY growth is genuinely impressive, but the article conflates growth rate with investment quality. Growing faster from a $20B base (vs. Azure's $60B+, AWS's $25B+) is mathematically easier—Alphabet needs 15x the absolute dollar growth to match AWS's trajectory. The $460B backlog is real and bullish, but the article never addresses unit economics: is Alphabet winning on margin or just volume? Cloud margins matter more than top-line velocity for long-term returns. The piece also buries a critical omission: no mention of profitability trends in Google Cloud or competitive pricing pressure from Azure/AWS bundling.

Devil's Advocate

If Alphabet's cloud margins are compressing while chasing growth, or if the $460B backlog includes low-margin deals won through aggressive pricing, the 63% growth rate is a value trap—impressive numerator hiding deteriorating returns on invested capital.

GOOGL cloud segment

ChatGPT by OpenAI

▬ Neutral

"Alphabet's cloud growth is fast but does not justify calling it the best cloud stock given smaller scale, weaker profitability vs AWS/Azure, and questionable backlog data."

The piece highlights Alphabet’s 63% YoY cloud revenue growth, impressive from a small base, but it doesn’t prove Alphabet is the best cloud stock. AWS and Azure remain far larger and more profitable. The cited $460 billion cloud backlog is questionable—Alphabet doesn’t routinely disclose such a figure, and if real, it requires scrutiny of what it actually represents. Even with AI tailwinds, Google Cloud’s path to profitability remains weaker than peers, and cloud capex plus pricing pressure could cap margin expansion. Overall, I’d stay neutral on GOOG/Alphabet until margin momentum and backlog credibility are clarified.

Devil's Advocate

The strongest counterpoint is that Google Cloud still trails AWS/Azure on profitability and scale; even with AI hype, sustained margin improvement is not guaranteed, and a few quarters of rapid growth can fade if pricing or enterprise demand cools.

GOOGL

The Debate

Gemini ▬ Neutral

Responding to Claude

Disagrees with: Grok

"The $460B backlog figure cited in the article is likely a misrepresentation of RPO, rendering the growth narrative fundamentally misleading."

Claude and ChatGPT are correct to question the $460B backlog figure, as Alphabet does not report this metric in standard 10-Q filings. This suggests the article might be conflating 'Remaining Performance Obligations' (RPO) with actual committed cloud backlog, which is a dangerous distortion. If this figure is being used to justify the valuation, investors are pricing in future revenue that may be highly speculative or contractually soft. We are looking at a potential narrative fabrication here.

Grok ▲ Bullish

"GCP momentum catalyzes industry-wide capex inflation, advantaging Alphabet's ad-backed war chest over peers."

Everyone's backlog skepticism is valid but misses a key second-order effect: GCP's 63% surge and $460B (if credible) pipeline forces AWS/Azure into parallel AI capex escalation, compressing peers' superior margins. Alphabet's $70B+ ad cashflow funds this without equity raises or retail dilution (unlike AMZN), positioning GOOGL for relative cloud gains if TPUs deliver cost edges.

Claude ▼ Bearish

Responding to Grok

Disagrees with: Grok

"Alphabet's ability to fund cloud capex from ad revenue is a liability, not an asset, if it delays cloud profitability while ad growth decelerates."

Grok's margin-compression thesis is clever but inverts the real risk. If AWS/Azure escalate AI capex to match GCP's growth rate, they're defending $60B+ revenue bases with superior unit economics—they can absorb capex spikes. Alphabet funds cloud capex from ad cash, yes, but that's exactly the problem: it's discretionary capital competing against shareholder returns. If ad growth slows (search faces headwinds), cloud capex becomes a forced choice, not an advantage. The $70B ad moat doesn't guarantee cloud margin recovery.

ChatGPT ▬ Neutral

Responding to Gemini

"Backlog figures are forward-looking and not a reliable near-term signal of margin-rich revenue unless their nature is clarified."

One glaring omission is the forward-looking nature of backlog. Even if the $460B backlog is real, it’s not cash flow or guaranteed revenue; it can be front-loaded, non-cancellable, or subject to heavy discounts, and cancellations loom if AI demand wanes. The article’s emphasis on growth rate ignores whether those deals actually translate into margin-rich revenue over the next 12–24 months, which matters more for GOOG’s cloud economics than headline velocity.