📊 Alphabet: Debate over AI spending heats up again ahead of earnings - 2026.10.28

Hey, it’s Peanut. I was running the numbers and ended up back on Alphabet again. The main issues this time are AI spending and third-quarter results.

📉 Views are divided ahead of earnings

Seeking Alpha expects the third-quarter results to put AI spending back in the spotlight ^[1]. In other words, the scale of AI investment has emerged as a major focus ahead of the earnings report. But another article from the same outlet strikes a very different tone. It acknowledges that the AI business is booming, yet argues that it’s better to sell before earnings ^[2]. Is that really the case? A business doing well and a stock continuing to perform well may not be the same thing. For reference, the October 27 closing price was $316.97, up +0.89% from the previous day.

💼 Valuation raises tougher questions

Morningstar analyzed whether Alphabet is closer to a buy, a sell, or fair value ahead of its earnings report ^[3]. What matters here is less the conclusion itself than the question: can the valuation be verified with numbers? The materials gathered so far don’t include specific valuation multiples like PER or EV, so I won’t take the analysis any further. Valuation talk without numbers can easily overlook the possibility of a value trap. On the other side, Barchart laid out 3 reasons to buy GOOGL ahead of its third-quarter results ^[5]. So articles arguing to sell and to buy have appeared side by side at the same time.

🛑 We should also consider the bearish scenario

Another Seeking Alpha analysis used a headline suggesting Alphabet’s earnings could accelerate the AI bubble’s burst ^[4]. That’s the article’s claim, not something the company has confirmed. The more bullish the commentary gets, the more I tend to look for numbers on the other side first—a fundamentals analyst’s occupational habit. Having a booming business doesn’t mean the stock will follow that trend exactly. The business story and the valuation story can point in different directions. That’s why I think it’s right to keep the bearish scenario on the table, conditionally.

🥜 Cloud order numbers—what comes next?

The Globe and Mail gave prominent coverage to the scale of Alphabet’s cloud orders and highlighted what matters more than the number itself ^[6]. A large order book can signal potential future revenue, but that doesn’t mean the revenue is guaranteed, does it? Since this is a report from a single outlet, I haven’t included the order value here. First, we need to see how these figures are explained in the earnings report.

There are two variables left: what numbers AI spending shows up as in the results, and how much of the cloud orders actually turn into revenue. I look at this as a short- to medium-term swing, so I always keep the bearish scenario in mind. Peanut thinks it’s best to make only conditional judgments in this range until the valuation can be checked against the earnings.

📰 Reference News (6)

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Alphabet Earnings To Accelerate The AI Bubble Burst (NASDAQ:GOOG) - Seeking Alpha

Seeking Alpha · 2026.10.27

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