Alphabet: The $462B Backlog Crushed The Bear Case, But At 30x P/E I'm Trimming To Buy

Alphabet reported a strong Q1 beat with revenue up 21.8% year-over-year and GAAP EPS of $5.11. Cloud momentum was a highlight: a $462B cloud backlog, cloud margins expanding to 32.9%, and AI-driven cost efficiencies of over 30% helped offset the company’s elevated capex plan (guidance rising toward $195B for 2026). The author trims a previous Strong Buy to Buy, arguing operational outperformance reduces the bear case but valuation (~30x P/E and ~$4.8T market cap) now limits upside. Net impact: fundamentals are bullish, but stretched valuation and higher capex temper near-term upside, supporting a cautious, mixed stance.