Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
GOOG· Communication Services
Alphabet
Alphabet is a wonderful toll bridge on the world's information, priced at 28.7 times earnings as a new competitor arrives.
Buffett fit
Partial fit
Owner
89
Durability
85
Management
76
Price
15
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Communication Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Alphabet, I would sleep well on the operations and poorly on the price.
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Search is a habit, and habits are the most durable there are. A five year return on capital of 25.7 percent shows the toll bridge has held its tolls for years, not quarters.
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Management has behaved like owners more often than not. The share count has shrunk 2.4 percent a year, which means each remaining share owns a bigger slice of the toll booth, and debt is a rounding error at 0.19 times equity with interest covered 277 times over.
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Here is where I step back. An yield of 1.6 percent and a price of 28.7 times earnings give me almost no cushion, and an enterprise value of 36 times operating profit is a rich number for any business on earth.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1 of 60.4 percent and of 32.7 percent show most businesses can only envy.
- 2Five year of 25.7 percent proves the has produced real cash for years, not just one good season.
- 3Earnings per share have compounded at 17.7 percent while revenue grew 11.8 percent, so each dollar of sales is dropping more to the bottom line.
- 4A fortress balance sheet with debt at just 0.19 times equity and interest covered 277 times over leaves no solvency worry.
Concerns
7- 1Valuation is the whole problem: at 28.7 times earnings, 36 times operating profit, and a 1.6 percent yield, there is no left in the price.
- 2 is only 55 percent of net income, so a large share of reported profit is being absorbed by data center spending rather than reaching owners.
- 3Return on capital has slipped from a 25.7 percent five year average to 19.2 percent this year, a sign the newest invested dollars are working harder for less.
- 4Earnings have fallen as much as 19.3 percent peak to trough before, so the cash flow is durable but not immune to a bad stretch.
Price history
$331+138.7%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Alphabet rents out the world's attention. It sells the slot next to a search result and the seconds before a video, and it does this at a 60.4 percent and a 32.7 percent that most businesses would trade their grandmother for. Revenue has compounded at 11.8 percent a year and earnings per share at 17.7 percent, which tells you the machine still grows and that the owners keep more of each new dollar than they did before.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Communication Services
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