GOOGActive

Will Alphabet's consolidated operating margin fall below 30% in Q2 2026?

Resolves August 15, 2026(140d)

IG: 0.80

Current Prediction

30%

Likely No

Model Agreement92%

Predictions9 runs

Last UpdatedMarch 27, 2026

Why This Question Matters

Operating margin is the arithmetic test of the depreciation thesis. Q4 2025 margin was 31.6% (-50bps YoY) with depreciation growing +38% vs revenue +15%. Three lenses converged on depreciation as the most underappreciated risk. Sub-30% margin in Q2 2026 would validate that the cost-side narrative is DIVERGING from reality and that ~25x earnings embeds an overly demanding margin defense assumption. Above 30% would suggest management can offset depreciation through revenue mix or cost discipline.

NARRATIVE_REALITY_GAPEXPECTATIONS_PRICEDCAPITAL_DEPLOYMENT

Prediction Distribution

0%25%50%75%100%

opus

sonnet

haiku

Range: 22% – 35%Aggregate: 30%

Individual Predictions(9 runs)

opusRun 1

28%

Q4 2025 margin was 31.6%, already compressed 50bps YoY. FY2026 CapEx nearly doubling to $175-185B means depreciation will accelerate significantly in H1. However, Q2 2026 depreciation will only reflect partial-year impact of FY2026 CapEx deployment (assets placed in service Q1-Q2), plus the existing asset base. The Stress Scanner projected $50-55B depreciation by FY2027, not FY2026. For Q2 specifically: existing depreciation run rate (~$5.3B/quarter) plus incremental from FY2026 CapEx deployment gives maybe $7-8B/quarter. Revenue growth of 15-18% provides substantial margin buffer. Sub-30% in Q2 2026 specifically (not FY full year) requires both elevated depreciation AND other cost pressures. Possible but not the base case.

Depreciation impact is phased — Q2 only partially reflects FY2026 CapExRevenue growth of 15-18% provides substantial margin bufferSub-30% more likely FY2027 event than Q2 2026

opusRun 2

32%

The depreciation arithmetic is real and starting now. FY2025 ran $21.1B with $91.4B CapEx base; FY2026 nearly doubles that. Even with phased deployment, Q2 should see depreciation well above the $5.3B/quarter average. Add R&D expansion (+42% in Q4, partly one-time Waymo but elevated trajectory), Other Bets losses ($6-8B/year normalized), and you get meaningful cost pressure. The 50bps compression already visible in Q4 2025 will likely accelerate. But revenue at +18% Q4 growth rate provides genuine buffer. I assign 32% — material risk but not majority.

Multiple cost pressures beyond depreciation: R&D expansion, Other Bets lossesRevenue acceleration (+18% Q4) provides genuine margin buffer32% reflects material risk that may be slightly early for Q2

opusRun 3

25%

Key insight: the Stress Scanner projected 600-1000bps compression to mid-20s margins by FY2027, not Q2 2026. The compression path is: 31.6% (Q4 2025) → ~30-31% (H1 2026) → ~28-29% (FY2027). Sub-30% in Q2 2026 requires faster-than-modeled compression. Revenue mix is actually improving (Cloud margins expanding from 17.5% to 30.1%), which partially offsets depreciation. Cloud is growing faster than Search, and its margin expansion is material at the consolidated level. Useful life could also be extended again. The 25% probability reflects a scenario where depreciation ramps faster than expected AND revenue growth disappoints.

Stress Scanner timeline puts sub-30% in FY2027, not H1 2026Cloud margin expansion (17.5% → 30.1%) provides partial offset at consolidated levelUseful life extension precedent provides management flexibility

sonnetRun 1

30%

The margin is at 31.6% and compressing. Depreciation growing 2.5x faster than revenue. CapEx doubling. The math works against margins. But Q2 2026 specifically is only the second quarter of the CapEx ramp — depreciation impact is phased. Most likely outcome is margins hovering in the 30-32% range for H1 2026, breaking below 30% in H2 or FY2027. Near coin-flip territory would require a one-time charge or macro weakness. Setting at 30%.

31.6% starting point with 50bps trend compressionCapEx doubling but depreciation phased — partial impact Q2Most likely breaks 30% in H2 2026 or FY2027, not Q2

sonnetRun 2

35%

I weight the cost pressures more heavily. Depreciation is the headline, but R&D at +42% (partly Waymo one-time but revealing elevated baseline), Other Bets losses at $3.6B quarterly, and the operational costs of DOJ compliance all accumulate. Q2 also lacks Q4 holiday advertising boost for the revenue denominator. The 50bps annual compression already observed could accelerate given the CapEx step-change. Also: management may front-load CapEx deployment to get infrastructure online for Cloud backlog conversion, which would accelerate depreciation recognition. 35% feels right for a scenario with multiple converging cost pressures.

Multiple cost pressures beyond depreciation convergingQ2 lacks Q4 holiday revenue boost — lower denominatorManagement may front-load CapEx deployment, accelerating depreciation

sonnetRun 3

27%

The base case is margins holding above 30% in Q2 2026 but compressing. Revenue growth provides substantial buffer — at +15% consolidated growth on $113.8B base, Q2 revenue should exceed $115B. Operating income needs to be $34.5B to maintain 30%. Q4 was $35.9B, so the bar is within reach even with rising costs. The compression to sub-30% is real but timing favors H2 2026 to FY2027. Setting at 27%.

Revenue growth provides buffer — Q2 revenue likely $115B+Operating income needs $34.5B at 30% margin — Q4 was $35.9BTiming favors sub-30% in H2 2026 or later

haikuRun 1

30%

Margin at 31.6%, compressing 50bps annually. CapEx doubling drives depreciation up. But Q2 2026 is early in the ramp. Revenue growth offsets partially. Near 30% probability — could go either way depending on CapEx deployment timing.

31.6% starting point with downward trendCapEx ramp still early in Q2Revenue growth provides offset

haikuRun 2

22%

Depreciation phased impact means Q2 unlikely to be the quarter margins break 30%. Cloud margin expansion at consolidated level partially offsets. More likely a FY2027 event. Setting at 22%.

Phased depreciation — full impact not until H2 2026 or FY2027Cloud margin expansion offsets at consolidated levelFY2027 more likely timing for sub-30%

haikuRun 3

33%

Multiple cost pressures converging plus seasonal revenue pattern (Q2 typically lower than Q4) makes this more probable than simple depreciation math suggests. Could be the quarter where multiple factors align to push below 30%. Setting at 33%.

Q2 typically lower revenue than Q4 — seasonal patternMultiple cost pressures convergingCould be the alignment quarter for sub-30%

Resolution Criteria

Resolves YES if Alphabet reports consolidated operating margin below 30.0% in Q2 2026. Resolves NO if operating margin is 30.0% or above.

Resolution Source

Alphabet Inc. Q2 2026 earnings report (10-Q or 8-K)

Source Trigger

Depreciation growth rate vs. revenue growth rate — currently +38% vs +15% (FY2025). Gap persisting 2+ quarters signals margin compression exceeding market expectations.

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