Alphabet’s Hidden Asset: SpaceX Stake Set to Deliver Windfall

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Alphabet Inc., the parent company of Google, holds a significant and often overlooked asset that is poised to dramatically boost its financial statements. A strategic billion-dollar investment made nearly a decade ago in Elon Musk's SpaceX is now reaching astronomical valuations, promising to deliver substantial unrealized gains. This development coincides with a major financial institution raising its price target for Alphabet's stock, reflecting broader confidence in the company's core operations and artificial intelligence trajectory.

Recent tender offer activity values SpaceX at approximately $800 billion, with its shares trading around $421. Back in 2015, Alphabet, alongside Fidelity, invested about $1 billion into the aerospace company, securing an estimated 10% stake at the time.

The value of this holding has surged. Early in 2025, Alphabet reported an $8 billion unrealized gain when SpaceX was valued at $350 billion. With the company's valuation now more than doubling, a massive upward adjustment is anticipated on Alphabet's balance sheet. Market experts predict this financial impact will be reflected in the "Other Income" line item by February 2026, providing a considerable earnings cushion distinct from its primary business operations.

Analyst Confidence and Core Business Strength

Investment bank TD Cowen has increased its price target for Alphabet shares to $350. Analysts cite the accelerated adoption of the Gemini 3.0 Flash AI model and the successful integration of AI features within Google Search as key drivers. Despite facing regulatory scrutiny, the search business remains resilient, with click growth accelerating to 7% year-over-year in the third quarter.

Alphabet also distributed its quarterly cash dividend of $0.21 per share today. While the yield remains modest at 0.27%, the company complements this with an aggressive share repurchase program, for which $74.8 billion remains authorized.

Navigating a Competitive and Regulatory Landscape

Since the start of the year, Alphabet's stock has outperformed its "Magnificent Seven" peers, appreciating roughly 64%. Its cloud division reported robust growth, with revenue climbing 34% to $15.2 billion last quarter. Fears that AI tools would cannibalize Google Search revenue have not materialized.

Challenges, however, persist. Disney recently announced a multi-billion dollar partnership with OpenAI to train its video generation tool, Sora, on Disney content—a move that positions it as a direct competitor to YouTube. Furthermore, on December 9, the European Union launched a new antitrust investigation into the use of online content for AI training. Potential penalties from such probes could reach up to 10% of a company's global annual revenue.

Market Focus and Forward Outlook

Currently, the market appears to be largely discounting regulatory risks, focusing instead on Alphabet's earnings potential. The stock is consolidating just below its 52-week high of $328.83, with 84% of covering analysts rating it a "Buy." A sustained breakout above the $315 level could pave the way for new record highs.

All eyes are now on the quarterly report scheduled for February 2026, which is expected to formally incorporate the multi-billion dollar revaluation of the SpaceX investment. Until that catalyst, equity strategists suggest the shares may continue to trade between $300 and $315.