Google Stock: How Explosive 50% Cloud Growth Could Propel Shares To Record Highs

Google (Alphabet) has just crested a historic milestone, posting its first $100 billion quarterly revenue in Q3 2025—and the tech giant shows no signs of slowing down. As 2026 approaches, three colossal engines are revving: Cloud infrastructure at an inflection point, AI monetisation finally accelerating at scale, and Waymo transitioning from experimental cash sink to legitimate revenue generator.

The stock is currently trading around $315 with a market capitalisation nearing $3.9 trillion, having surged 60% year-to-date. The real question for investors isn't whether Google will grow in 2026—it's how spectacularly.​​

Google's Cloud Explosion: The $155 Billion Wildcard

The most tantalising narrative centres on Google Cloud, where Morgan Stanley analysts boldly forecast growth exceeding 50% in 2026, compared to consensus expectations closer to 35%. The lynchpin? A staggering $155 billion backlog of undelivered orders, representing 46% quarterly growth. Historically, this backlog converts into 45-50% of annual Cloud revenue, meaning roughly $70-80 billion is locked in.​​

Two forces compound this potential explosion. First, the backlog conversion: those multiyear contracts signed throughout 2025 will finally deliver revenue recognition. Second, AI workload demand has gone viral. Over 70% of Google's current Cloud customers now utilise AI products, and every enterprise racing to compete requires computing power. When supply tightens and demand roars, pricing power follows.

If Cloud revenue hits $60 billion in 2025 and grows 50% as some analysts predict, that yields roughly $90 billion in 2026—jumping from 15% to 20% of total revenue. Operating margins, climbing from 17% in Q3 2024 towards 25%, compound the margin story. This is high-quality, profitable expansion.​

The math is elegant: infrastructure investment today becomes billable compute tomorrow. Meta's recent $10 billion six-year Cloud deal validates this thesis spectacularly.​

AI Monetisation: Search Enhanced, Not Disrupted

The 'ChatGPT kills Google' narrative has collapsed. Google's search revenue grew 15% in Q3 2025 to $56.6 billion, dispelling existential worries. AI Mode now boasts 75+ million daily active US users, with queries doubling quarter-on-quarter.

Gemini reached 650 million monthly active users by year-end, up from 450 million mid-year. The crucial insight: AI lengthens engagement, creates more advertising inventory, and enhances search quality. It augments, not cannibalises.​​

Reports suggest Google intends to insert ads into Gemini conversations by 2026. Even if delayed, AI Overviews already display ads within search results. Longer dwell times mean more impressions.

The competitive calculus is telling: ChatGPT has 800 million weekly users, yet Google's search market share remains near 90%. AI isn't disrupting Google's moat; it's fortifying it.​

Waymo: From Burning Cash to Breaking Even

Waymo has quietly scaled to 250,000-450,000 paid rides weekly—a dramatic acceleration in an industry many dismissed as perpetually embryonic. For 2026, the company targets 1 million weekly rides, a 100-150% expansion, with 5,000+ vehicles serving 20 new cities including Detroit, Las Vegas, Miami, Dallas and international launches in Tokyo and London.

Revenue projections span $750 million to $1.3 billion for 2026—a business achieving 100%+ growth whilst operating at a loss. At an average $20 per ride, 1 million weekly rides translates to a $1 billion annual run rate by late 2026.​

CEO Sundar Pichai's statement that Waymo will be 'meaningful in our financials' by 2027-2028 signals confidence this scaling year precedes profitability. Yes, recent San Francisco blackout incidents underscore safety risks, but momentum is genuine. Waymo's valuation nears $100-110 billion as it eyes $15 billion in fresh funding—audacious for a loss-making unit. The market, however, is betting on 2027-2028 inflection.​

YouTube and Advertising: The Steady Anchor

YouTube ads hit $10.26 billion in Q3 2025, surpassing expectations. Total advertising revenue reached $74.18 billion, up from $65.85 billion year-over-year. YouTube Premium, Music and Google One combined surpassed 300 million paid subscriptions.

YouTube Shorts now earns more revenue per watch hour than traditional in-stream video in the US. Traditional advertising isn't declining—it's adapting. AI-optimised Performance Max campaigns boost advertiser ROI, incentivising higher spend.​​

The CapEx Wager: Building Tomorrow Today

Google spent $91-93 billion on capital expenditure in 2025, with 2026 expected to see a 'substantial increase' toward $100-120+ billion. Sixty per cent funds servers (TPUs and GPUs for AI workloads); 40% covers data centres and networking.

This isn't profligacy—it's strategic positioning. The $155 billion Cloud backlog necessitates infrastructure. Meta's commitment to Google-designed TPU clusters validates demand, not speculation.​

Valuation: Underpriced or Stretched?

At 27-28x forward earnings, Google trades below Amazon (35x) and Microsoft (32x), whilst its Cloud and AI positioning arguably merit premium multiples. Bull-case scenarios see 2026 EPS reaching $12.00-12.50, supporting $360-375 targets—14-19% upside.

Base-case forecasts align consensus at $11.47-11.50 EPS, delivering modest flat-to-6% returns. Bear-case downside—triggered by antitrust action, recession or Waymo stumbles—could compress multiples to 24x and target $264-270.​

Wall Street consensus? Overwhelmingly bullish. Fifty buy ratings, nine overweight, twelve hold, zero sells among 75 analysts—a striking absence of scepticism even as the stock approaches $4 trillion market cap.​

The Bottom Line: Execution Year

For 2026, this is less moonshot and more 'show me the Cloud and Waymo conversion' narrative. The infrastructure bets are sunk. The backlog is locked in. AI tools are deployed. Now comes execution—the unsexy, vital slog of delivering promised services, converting those contracts, and proving Waymo's path to profitability.

At current valuations, the risk-reward leans favourable, but regulatory headwinds, competitive threats and macro weakness remain material risks.