Is GOOG Stock a Buy Ahead of Q1 Earnings and Amid Fragile Peace in the Middle East?

U.S. stocks hit record highs last week as the fragile truce in the Middle East brought the much-needed succor for investors. Specifically, Alphabet (GOOG) (GOOGL) stock, which briefly fell below $300 levels in March, is now approaching its all-time highs.

In my previous article, I had noted that Alphabet’s risk-reward looked a lot more balanced after the correction, even though it hadn’t entered a compelling buy zone given the macro situation. However, the rise in GOOG stock has been swift, as the tentative de-escalation in the Iran war has buoyed sentiment and lifted broader markets.

Alphabet Stock Is Approaching Its Record Highs

That said, Alphabet's rise is not solely due to the market rally, and there have been several positive developments for the company. Just as OpenAI’s fortunes—or rather, the reversal of them—have been taking a toll on Microsoft (MSFT) stock, Alphabet has been riding the Anthropic wave. Anthropic’s progress in artificial intelligence (AI) has been impressive, and thanks to its soaring valuations, Alphabet’s stake in the company is now over $50 billion.

Separately, filings showed that Alphabet owns over a 6% stake in SpaceX, which could be valued north of $100 billion if the Elon Musk-run company goes public at the kind of valuations that are floating around.

Alphabet has been pushing for third-party sales of its tensor processing unit (TPU), which is pitched as an alternative to Nvidia’s (NVDA) graphics processing units (GPUs). The Google parent’s TPUs are being used by Anthropic, while Meta Platforms (META) is said to have signed a multi-billion-dollar deal to rent these. Alphabet is reportedly in talks with Marvell Technology (MRVL) for two new chips. TPUs could be a significant revenue contributor for Alphabet over the next couple of years.

Alphabet Q1 2026 Earnings Estimates

Alphabet will release its Q1 2026 earnings on April 29 after the close of markets. Analysts expect the company to report revenues of $106.9 billion, a year-over-year (YoY) increase of 18.5%. Its earnings per share (EPS) is, however, expected to fall 6.4%. Notably, Alphabet’s profitability is expected to remain challenged in the coming quarters as its depreciation expenses are set to explode higher on higher AI capex.

Alphabet’s EPS is expected to rise 6.6% in 2026 and 16% next year. The company is expected to post negative free cash flows this year as it increases its capex to build the AI infrastructure. For context, Alphabet raised its 2026 capex budget to between $175 billion and $185 billion, which is roughly twice what it spent last year.

Should You Buy GOOG Stock Before Q1 Earnings?

Alphabet has shown significant resilience, and its ad and search businesses have held their ground despite the competition from AI startups. YouTube—which I have long maintained is an underappreciated asset in Alphabet’s portfolio—is now running at an annualized revenue run rate of $60 billion.

Notably, apart from the core search and advertisement business, Alphabet is also a major cloud company and is the third largest player in the U.S. behind Amazon (AMZN) and Microsoft. Alphabet has services like the Waymo self-driving unit, which will add long-term value even though the business—which is part of its “Other Bets” segment—is currently a drag on profits.

Alphabet has doubled down on the subscription business, which would add a recurring revenue stream. The company had 325 million paid subscribers at the end of 2025, led by YouTube Premium and Google One.

However, while I continue to hold GOOG shares, I won’t add to my positions ahead of the Q1 earnings, as the stock looks fairly priced at a forward price-to-earnings (P/E) multiple of nearly 29x. To be sure, given its progress in AI, Alphabet has earned the right to trade at higher multiples, but at these levels, there is little margin of safety in the stock, and I don't see much possibility of a post-earnings bump.

Alphabet has a consensus rating of “Strong Buy” from the 55 analysts polled by Barchart. Its mean target price is $378.66, which is over 11% higher than the current price levels.