How Much Upside Is Left In Google Stock?
Alphabet (GOOGL) stock returned 41% over the past twelve months, against 17.1% for the S&P 500. After a run like that, you may assume most of the gain is behind you, but the business has sped up as the stock climbed. Revenue grew 24.2% in the latest quarter from a year earlier, up from 15.9% three quarters before. So what could three more years of owning Alphabet return?
Three Years Could Add About 75% To Alphabet Stock
Alphabet stock would be worth about 74.9% more in three years, on the assumptions below. That is arithmetic, not a forecast: earnings move with revenue and the margin, and earnings times the P/E gives the value of the company. The table shows each of them today and three years out.
| Today | In three years (scenario) | |
|---|---|---|
| Revenue | $445.9 billion | $714.9 billion |
| Operating margin | 33.1% | 32.3% |
| Earnings | $244.2 billion | $381.7 billion |
| P/E | 17.3 | 19.3 |
| Share price | $346.47 | $605.93 |
Most of the gain, about 84% of it, comes from revenue. We assume revenue grows 17% a year, set a little below Alphabet’s growth in the twelve months to fiscal Q2 2026. That revenue comes mostly from two businesses: the ads Google sells alongside searches, and Google Cloud, which sells AI infrastructure and tools to companies.
Alphabet’s P/E of 17.3 is based on net profit, which was larger than its operating profit over the past twelve months. That makes the P/E look lower than the business alone would make it. That P/E is below the stock’s own three-year average of 22.4, taken from quarter-end readings with those above 100 left out. If we assume the reported P/E normalizes part of the way back toward that historical 22.4 average as one-off gains roll off, multiple expansion supplies the remainder of the projected gain.
Who Has To Spend More With Alphabet?
For Alphabet’s revenue to grow 17% a year, both advertisers and cloud customers will have to spend significantly more. In fiscal Q2 2026, Search and other advertising revenue rose 17% to $63.3 billion. Cloud is smaller at $24.8 billion, but its revenue rose 82%, which management put down to demand for its enterprise AI products. Cloud’s backlog of signed work reached $514 billion in that quarter, and management expects to recognize just over 50% of it as revenue within two years.
Alphabet gave no revenue guide for the year in its latest release, but on the July 22, 2026 call management said demand still outpaces what Alphabet can build. It raised its 2026 capital spending guide to a range of $195 billion to $205 billion. Management also said that spending will keep pressing on profit through higher depreciation and data center costs. Alphabet’s next results, expected on or around October 27, 2026, will show whether Cloud is still growing near 82%.
What If Alphabet’s Sales, Margin Or P/E Disappoint?
Alphabet’s upside shrinks in each of the three shortfalls below, but it does not disappear. The table changes one assumption at a time.
| If instead | Upside |
|---|---|
| Nothing changes (the scenario) | 74.9% |
| Revenue grows two points a year slower | 66.1% |
| The margin returns to its three-year average | 64.3% |
| The P/E stays where it is today | 56.3% |
| Five years at the same pace instead of three | 139.6% |
Of the three shortfalls, the biggest loss comes if investors keep paying today’s P/E instead of a higher one. The margin lowers the gain a little, since we assume an operating margin between today’s 33.1% and its three-year average of 30.3%. The revenue assumption also starts from an unusually fast year. Revenue grew 20% in the twelve months to fiscal Q2 2026, against about 13% in each of the two twelve-month periods before.
Revenue is the main source of the gain, and it is also the assumption with the least room to miss. Three years of owning Alphabet stock would return nothing if revenue shrank 2.9% a year. That rate is 22.9 points below the growth of the last twelve months. Alphabet’s revenue rose in each of its last three fiscal years, by 8.7% in the slowest.
The case stays intact as long as Search ads and Cloud contracts keep bringing in revenue faster than Alphabet’s data center costs grow. If Cloud growth slows sharply in the October report while spending keeps rising, Alphabet becomes a riskier bet that relies more on investors paying a higher P/E.
Does This Mean You Should Act On GOOGL?
Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.
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