For Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), I think there's one metric that defines the entire stock: Its cloud computing growth rate. In Q2, Google Cloud revenues grew at an incredible 82% pace. That's about double the pace its cloud computing peers are growing at.
I think this showcases that Alphabet's platform is rising as one of the best available, and if it keeps this growth up, it could push the stock to new heights. I think that adds up to make Alphabet stock a great buy, particularly now, while it's still down by more than 10% from its all-time high. This Rare Signal Is Flashing Again.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » What makes Google Cloud's Q2 growth rate of 82% so impressive is how quickly it has accelerated.
In Q4 2025, it was 48%, and in Q3 2025, it was 34%. That's some rapid acceleration, and I think there's a pretty easy explanation for it. Alphabet has been spending big on data center infrastructure over the past few years, but those outlays really ramped up in 2025.
As the resulting computing capacity came online throughout the year and into 2026, it allowed Alphabet to convert more of its cloud backlog into growth. Last month, Alphabet increased its capital expenditure guidance range for 2026 by another $15 billion to $195 billion to $205 billion, around double 2025's levels. This will extend its rapid growth rate well into 2027, but I think that trend could last for several more years beyond that.
During Q1's conference call, Alphabet's management team informed investors that 2027's capital expenditures would be "significantly" higher than 2026's. That showcases that the company perceives that there's still massive unmet demand, and that will allow Google Cloud's revenue growth rate to stay elevated. Another catalyst that's coming later this year and into 2027 is the sales of its custom AI chips, Tensor Processing Units (TPUs).
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