Accelerated Growth in Google Search and Cloud Strengthens Alphabet’s (GOOG) Rally

4 weeks ago 7

Soumya Eswaran

Fri, July 17, 2026 astatine 8:44 AM CDT 4 min read

Wedgewood Partners, an concern absorption company, released its first-quarter 2026 capitalist letter. A transcript of the missive tin beryllium downloaded here. Wedgewood Composite delivered a nett instrumentality of 9.4% successful the 2nd 4th compared to 15.2% for the Standard & Poor's 500 Index, 16.7% for the Russell 1000 Growth Index, and 13.9% for the Russell 1000 Value Index. The steadfast is optimistic astir the semipermanent maturation of hyperscalers and has accrued its investments successful this sector, citing their important net imaginable and important relation successful AI adoption. Capital has besides been redirected towards exertion hardware stocks, particularly semiconductors, which present marque up a larger stock of the S&P 500 Index. Semiconductor stocks person benefited from hyperscalers' spending, but the steadfast expresses caution astir cyclical hazard and volatility. However, the momentum-driven marketplace negatively affected the Wedgewood fund's high-quality stocks, starring to a 25% instrumentality implicit the past 15 months, importantly underperforming the 90% summation of the S&P 500 Momentum ETF (SPMO). In addition, delight cheque the Fund's apical 5 holdings to cognize its champion picks successful 2026.

In its Q2 2026 capitalist letter, Wedgewood Partners highlighted Alphabet Inc. (NASDAQ:GOOG) arsenic a starring show contributor. Alphabet Inc. (NASDAQ:GOOG), the genitor institution of Google, offers assorted platforms and services, including online hunt and advertising, unreality solutions, and artificial intelligence. On July 16, 2026, Alphabet Inc. (NASDAQ:GOOG) closed astatine $353.81 per share, reflecting a marketplace capitalization of $4.31 trillion. Alphabet Inc. (NASDAQ:GOOG) posted a one-month instrumentality of -3.71%, portion its shares gained 90.28% implicit the past 52 weeks.

Wedgewood Partners stated the pursuing regarding Alphabet Inc. (NASDAQ:GOOG) successful its Q2 2026 capitalist update:

"Alphabet Inc. (NASDAQ:GOOG) was a apical contributor to show during the quarter. Google Search and Cloud proceed to accelerate, with Search posting 19% gross maturation and Cloud posting 63% gross growth, helping thrust 30% maturation successful operating income. That torrid maturation successful operating income compares to, we estimate, much than 40% maturation successful Alphabet's full gross assets. While that means returns connected superior were somewhat diluted, they stay supra 30%. We deliberation Alphabet is an exceedingly rare, if not wholly unique, business, increasing a astir $450 cardinal gross plus basal by 40% portion maintaining a 30% instrumentality connected that monolithic plus base. These are astonishing compounding figures. Further, we person excluded from operating income large, unrealized gains from the Company's concern portfolio, which totaled much than $35 cardinal successful the astir caller 4th (mostly owed to SpaceX) and astir $50 cardinal implicit the past six quarters. The Company besides has a 14% involvement successful the backstage institution Anthropic. That involvement could beryllium worthy much than $100 cardinal based connected valuations reported from caller superior raises. We item these investments due to the fact that these investees are drivers of caller ostentation successful constituent costs, particularly DRAM memory. Although the marketplace typically ignores the "one-time" concern gains that Alphabet has made, we deliberation these highly ample gains person served arsenic a de facto hedge for the rapid, incremental capex spending requirements. In different words, we estimation the $150 cardinal successful concern gains connected SpaceX and Anthropic (if realized) could efficaciously screen incremental DRAM-related capex costs for respective years. These one-time gains are not included successful our halfway calculations for returns - but suffice it to say, Alphabet has plentifulness of excess profitability to proceed investing some responsibly and aggressively…" (Click present to work the afloat text)

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