TMTB: GOOGL - the case for 30x; META Takeaways

Trying to get these out as I write them, more to come….

GOOGL: Clean top line beat with all businesses accelerating, margins better, and a step up in capex.

This was a great clean print for a co that has done a complete 180 in AI loser to AI winner narrative. More details on the numbers below, but the quick takeaways: the beat was clean and all businesses accelerating.

Let’s get to what’s important. The key debate on the stock is: what does this trade at? We’ve struggled making GOOGL a sized position as we have had trouble giving it higher than 25x. I think after last night most can agree 25x is definitely reasonable - not much debate there in what I’m hearing from investors. 25x $13 CY27 EPS = $325, only 10% upside.

Can we do 30x? Let’s put on our dream bull cap and outline why it should….

GOOGL owns the end-to-end AI stack and has clearer, multi-vector monetization vs. MSFT which trades at 30x. Just assuming normal q/q Q4 seasonality, we think GCP will easily get to 40% y/y growth next quarter and sustain 40%+ throughout 2026. GOOGL’s TPU gives ia structural cost/performance lever vs peers that rent from NVDA.. TPU checks are about as strong they come in an industry where checks are already VERY strong. With Azure growth hovering around 40% over the next couple of quarters given demand constraints, it is very likely GCP will be the fastest growing cloud in 2026. Backlog just accelerated to $155B +70% not even including Anthropic. We liked this from Indra on X:

Semis are a bubble? Cool Google gets them for cheaper and the compute is DEFINITELY not a bubble. Semis not a bubble? Cool Google has TPU’s and also should see benefits via GCP/Gemini regardless.

GOOGL had the best frontier model for most of 2025 and likely that Gemini 3 will continue that for 2026 — its rumored we see the launch in middle of November which provides a nice catalyst ahead. GOOGL also carries a free but increasingly tangible call option in autonomy with Waymo.

Finally, something we love here at TMTB is scarcity value: GOOGL is the only company that combines custom silicon, a hyperscale cloud, frontier-model research, and global consumer distribution along with Autonomy.

Vs MSFT, shouldn’t GOOGL trade at least on par with them with similar or stronger AI economics per dollar of compute via TPUs, potentially better forward cloud growth and visibility/capacity, and broader consumer AI distribution along with owning the best frontier model. Let’s not mention you can argue that Deepmind is best positioned for the next major step change in AI — doesn’t that deserve a premium?

Bears will say ChatGPT ad monetization is around the cover, but ChatGPT has just gone from 0 to 800WAUs without denting GOOGL - 0 decel in clicks on a 2 year stack. Building an ad platform will take time (proving conversions, being able to scale performance campaigns, etc.)

I gotta say - it’s feeling good wearing this dream bull cap (image courtesy of GOOGL’s nanobanana)

That’s the dream. Do I believe it? For today, I kind of do. The TPU/GCP accel narrative is set in stone. The main risk we watch here is 3p search data showing any sort sustained decel as that could easily cap the multiple / shift narrative in a less positive direction.

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Key Takeaways from the call: