Is Alphabet’s Search Risk Really Priced In? Stress‑Testing Rosenblatt’s $410 Thesis

Alphabet’s search business is being scrutinized as AI chatbots rise, yet the latest quarterly numbers still show robust growth.

Search Business Reborn: AI Mode and Gemini’s Impact

■Google Search & other revenue $63.3 billion in Q2 2026, up 17% year‑over‑year, just shy of the $63.4 billion consensus.

■Search growth had accelerated from 10% to 12%, 15%, 17% and 19% in successive quarters, but the streak broke in Q2 2026.

■Gemini surpassed 1 billion monthly active users in August 2026, becoming the fastest‑growing product in Alphabet’s history.

■For the first time in 25 years the search box now features an “AI Mode” button, widening the range of queries the ecosystem can handle.

Cloud Business Accelerates: TPU Monetization and Capacity Expansion

■Google Cloud revenue reached $24.8 billion Q2 2026, an 82% YoY jump.

■Segment operating income more than tripled, rising from $2.8 billion to $8.8 billion.

■Planned TPU capacity expansions beyond 2027 aim to push operating profit above expectations.

■Rosenblatt views cloud momentum as the key counterweight to any lingering search risk, underpinning its $410 price target.

Investor Profile and Stake Moves: Hedge Funds and Berkshire Hathaway

■Insider Monkey data show 265 hedge funds held Alphabet at Q1‑end, down from 288 the prior quarter.

■Q2 filings reveal Berkshire Hathaway owning 78.8 million shares worth roughly $28.2 billion.

■Fisher Asset Management and Arrowstreet Capital also reported multi‑billion‑dollar positions.

Gökberk Uçar (Air Freight Logistics & Cargo Specialist): Alphabet’s search slowdown is being offset by AI integration and cloud strength; the longer‑term risk lies not in search but in whether cloud capacity and TPU monetization can meet expectations. This framework supports the $410 target while limiting overreaction to search‑centric worries.