While shares of Alphabet (GOOG +0.67%)(GOOGL +0.68%) have underperformed the S&P 500 so far in 2026, investors should remember that the stock is up more than 70% over the last 12 months. So, a modest lag as the S&P 500 gains 1% year to date seems reasonable.

The bigger question is whether, with such a monstrous gain in the rearview mirror, it’s too late to buy the stock. Investors buying the stock today have to pay a substantially higher valuation for the Google parent company than they did 12 months ago. Is the stock worth this valuation? Or should they wait to see if they get a better entry point into the tech stock?

Accelerating growth

To understand why the Street has been so optimistic about Alphabet’s business over the last 12 months, look at its accelerating year-over-year revenue growth trends in recent quarters. After growing its top line 12% year over year in the first quarter of 2025, this growth rose to 14% in Q2, 16% in Q3, and finally 18% in Q4.

And even this accelerating trend arguably understates its momentum. Probably the bigger thing exciting investors recently has been the accelerating growth of Google Cloud, its cloud computing business. Google Cloud revenue rose 28% year over year in Q1, 32% in Q2, 34% in Q3, and a staggering 48% in the fourth quarter of 2025.

And there’s plenty of evidence that the company is succeeding in AI. Not only is AI showing up across Alphabet’s entire business, but its AI app Gemini has now grown to over 750 million monthly active users. Further, Alphabet CEO Sundar Pichai said in its fourth-quarter update that “Search saw more usage than ever before, with AI continuing to drive an expansionary moment.”

Given the stark difference in Alphabet’s growth rates between its most recently reported quarter and the first quarter of 2025 and the clear momentum the company was seeing in AI at the end of 2025, the company arguably deserves its much higher valuation today than it did a year ago.

A look at Alphabet stock’s valuation

Interestingly, despite the stock soaring more than 70% over the past 12 months, Alphabet shares aren’t necessarily expensive today. As of this writing, the stock trades at a price-to-earnings ratio of about 29 — not bad for a company that saw revenue grow 18% year over year in Q4 and has an important catalyst in Google Cloud, which posted 48% year-over-year revenue growth in Q4.

And keep in mind that while technology in general is considered risky, Alphabet’s business is fairly diversified. Yes, about $82 billion of its approximately $114 billion of fourth-quarter revenue came from advertising. But about $13.6 billion of that revenue came from Google subscriptions, platforms, and devices, and about $17.7 billion from Google Cloud.

Additionally, Alphabet has a spectacular balance sheet. It ended 2025 with nearly $127 billion of cash, cash equivalents, and marketable securities, up from about $96 billion in 2024. And the company operates with a significant net cash position; its long-term debt at the end of 2025 is just $47 billion.

Today’s Change

(0.68%) $2.10

Current Price

$313.00

Key Data Points

Market Cap

$3.8T

Day’s Range

$309.45 – $313.60

52wk Range

$140.53 – $349.00

Volume

1.2M

Avg Vol

35M

Gross Margin

59.68%

Dividend Yield

0.27%

Of course, you can’t talk about big tech companies these days without discussing their capital expenditures budget, and Alphabet’s is big. The company plans to spend between $175 billion and $185 billion in capital expenditures in 2026. With net cash provided by operating activities in 2025 coming in at about $165 billion, it looks like Alphabet plans to spend most, if not all, of its operating cash flow in 2026.

Big spending like this, of course, raises the stock’s risk profile. But it also increases the potential reward if these investments pay off handsomely over the long haul. And given that Alphabet is historically a good steward of capital, odds are this big spending spree will yield a good return on investment. But given the sheer scale of its capital expenditures and the fact that tech companies are undergoing a transformative phase driven by AI, the stock may require an unusual amount of patience from investors.

Circle’s growth is a sign that demand for stablecoins remains strong despite the broader crypto market’s downturn, as the company reported that the amount of USDC in circulation ticked up about 72% compared to last year. The current market cap for USDC is around $75 billion. Stablecoins, a type of cryptocurrency pegged to a fiat currency, have become increasingly popular in the past year, as a wide array of companies use them to transfer money. 

“Overall, the underlying use cases of USDC are accelerating despite crypto price headwinds,” said Robert Bamberger, a senior equity research associate at Baird. 

Circle, the second-largest global issuer of stablecoins, said in the statement that major companies like Visa and Polymarket are adopting its infrastructure. The company also said that it is partnering with Bermuda’s government to make the country the world’s first fully onchain national economy. 

As a stablecoin issuer, Circle makes most of its income by investing its users’ funds in short-term U.S. treasuries. This means that its revenue is vulnerable to any move by the Federal Reserve to lower interest rates. The company has invested in creating its own blockchain, called Arc, to diversify its revenue stream. 

Circle’s CEO, Jeremy Allaire, is a longtime believer in crypto and founded the company in 2013. Circle has become more prominent since President Donald Trump took office, as he signed the Genius Act in July to establish a regulatory framework for stablecoins. 

Circle went public in June, five months into Trump’s crypto-friendly term. The company’s stock skyrocketed 250% in its first two days, which was considered the biggest two-day pop in 45 years. As U.S. interest rates lowered to end the year and as cryptocurrencies tanked, Circle’s shares plunged in its November earnings report. The company seems to have bounced back since then. 

Nathan Schmidt, an analyst at CFRA research, says that the company should keep growing if it plays its cards right. “We believe Circle proved stablecoins can be highly profitable infrastructure plays, but sustaining this performance requires navigating rate compression, scaling technical infrastructure, and defending market share in an increasingly competitive landscape,” he said.