Entering 2026, the narrative that generative AI would dismantle Google Search has largely deflated. The successful integration of Gemini 3 into “AI Mode” for Search hasn’t cannibalized ad revenue; it has increased query complexity and user dwell time.
The long-term case for Alphabet in 2026 rests on two pillars that competitors cannot easily replicate:
- Distribution at Scale: Gemini’s native integration into the Android ecosystem (now exceeding 3.9 billion active devices) provides a zero-acquisition-cost funnel that OpenAI and Microsoft still struggle to match.
- Infrastructure Capex: With Capex projected to exceed $110B in 2026, Alphabet is building a physical moat of proprietary TPUs that makes them less dependent on third-party silicon than their peers.
Strategic Outlook: We view the current regulatory scrutiny not as an existential threat, but as a secondary risk that is already largely priced into the stock’s premium multiple.
