Alphabet (GOOGL) has just put its spending plans under a brighter spotlight. After strong recent results, the company lifted its 2026 capital expenditure forecast toward roughly US$200b, turning free cash flow negative and stirring fresh debate about AI infrastructure bets.

Alphabet’s share price has been choppy since earnings, with a 1-day share price return of 2.19% but a 90-day share price return of 4.64% and year to date still up 5.89%. Over the longer run, the stock’s 1-year total shareholder return of 70.96% and 3-year total shareholder return of about 2.6x suggest momentum has been strong even as recent AI spending plans prompt investors to reassess risk.

If Alphabet’s AI infrastructure push has you thinking about other ways to participate in the trend, it can be useful to see how smaller players are priced and growing. A focused screener of 56 AI infrastructure stocks is one way to surface potential ideas with similar themes but very different risk profiles.

Alphabet shares just absorbed a sharp reset after that huge AI capex update, which leaves a simple fork in the road: Has the selloff cleared room for more upside, or did investors already enjoy the best of this run?

Most Popular Narrative: 22.9% Undervalued

Alphabet’s most followed narrative pegs fair value at $433 per share, compared with the recent close around $333. That gap is what the debate now revolves around.

Alphabet is a compounding machine hiding under an ad empire. With AI monetization finally catching fire, Cloud turning profitable, and more YouTube monetization coming, this isn’t just a “big tech stock”, it’s an innovation platform priced like a mature business.

Curious what sits behind that premium over today’s price? The narrative leans on Search and YouTube cash generation, rising Cloud economics, and robust margins across the group.

Result: Fair Value of $433 (UNDERVALUED)

However, the Alphabet bull case still hinges on heavy AI capex paying off, as well as on regulators not forcing changes that weaken its core ad and Search economics.

Next Steps

Given the mix of optimism and concern around Alphabet, it makes sense to look at the data yourself and decide where you stand. To see how the positives and negatives stack up side by side, review the 4 key rewards and 2 important warning signs

Looking for more investment ideas beyond Alphabet?

If Alphabet has sharpened your focus on where to put fresh capital, do not stop here. Use targeted screeners to spot other opportunities before the crowd moves.

• Hunt for potential value candidates by scanning 49 high quality undervalued stocks that pair quality fundamentals with prices that may not fully reflect them.
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• Tighten your risk profile by focusing on 83 resilient stocks with low risk scores that aim for steadier returns and fewer nasty surprises.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.