Market Capitalization $473.2 Billion

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1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F BUY July 19, 2016 SDAQ: BUY RATING SINCE 07/19/2016 TARGET PRICE $ BUSINESS DESCRIPTION Alphabet Inc., through its subsidiaries, provides online advertising services in the United States, the United Kingdom, and rest of the world. The company offers performance and brand advertising services. It operates through Google and Other Bets segments. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS RETURN ON EQUITY (%) Ind Avg S&P 500 Q Q Q Sector: Technology Sub-Industry: Internet Software & Services Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History TARGET PRICE $ HOLD BUY HOLD 1, P/E COMPARISON RECOMMENDATION We rate () a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any nesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. Although no company is perfect, currently we do not see any significant nesses which are likely to detract from the generally positive outlook EPS ALYSIS¹ ($) Ind Avg S&P 500 HIGHLIGHTS The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. Despite its growing revenue, the company underperformed as compared with the industry average of 20.5%. Since the same quarter one year prior, revenues rose by 17.4%. Growth in the company's revenue appears to have helped boost the earnings per share. Q Q Q Q Q Q Q = not available NM = not meaningful Q Q Compustat fiscal year convention is used for all fundamental data items. Although 's debt-to-equity ratio of 0.04 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.99, which clearly demonstrates the ability to cover short-term cash needs. Net operating cash flow has increased to $7, million or 15.73% when compared to the same quarter last year. Despite an increase in cash flow, 's average is still marginally south of the industry average growth rate of 19.28%. PAGE 1

2 SDAQ: PEER GROUP ALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -25% 100% UNFAVORABLE YHOO 0% TWTR LNKD EBITDA Margin (TTM) BIDU L BABA NTES FAVORABLE AKAM EBAY FB 50% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $10.1 Billion and $473.2 Billion. Companies with or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -25% 100% UNFAVORABLE YHOO -15% Earnings Yield (TTM) TWTR FAVORABLE FB LNKD AKAM NTES BIDU BABA L EBAY 10% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -20.1% and 98.2%. Companies with or NM values do not appear. INDUSTRY ALYSIS The US internet software and services industry includes companies that develop and market internet software and provide services such as online databases, interactive services, web address registration, database construction, and website design. The industry is highly competitive and characterized by rapid technological changes, evolving industry standards, and frequent new product and service developments. The industry includes about 4,000 companies, with combined annual revenue of approximately $30 billion. Alphabet (), ebay (EBAY), and Yahoo (YHOO) are major players. Over the past decade, consumers have embraced the online channel to purchase goods and services. The number of worldwide consumers becoming more comfortable in using the internet to purchase goods or services is expected to continue to grow. Increasing online availability of services and declines in broadband tariffs and associated hardware prices will continue to drive robust growth. There is an on-going trend toward industry consolidation as leading companies seek access to new technology and customer bases developed by recent start-ups in order to increase market share. Recent acquisitions by large and well-capitalized technology companies have altered the competitive landscape. Profitability of individual companies depends largely on volume and efficient operations and small companies compete by serving niche segments or by providing technical expertise. The industry is highly competitive, particularly in the advertising segment. This competition has intensified as a result of consolidation and low entry barriers, which has caused price reductions for advertising space, implying a drop in margins. Another challenge facing the industry is related to secure transmission of personal information over public networks. These networks are vulnerable to unauthorized access by hackers and computer viruses. Allowing unauthorized access to users information subjects a company to reputational, financial, and legal risks. Looking forward, companies success will depend on their ability to adopt rapidly evolving technologies, alter services to meet industry standards, and improve the performance and reliability of services. Investment in research and development will continue to be an integral part of company and industry success. PEER GROUP: Internet Software & Services Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) , , , L , , , BIDU BAIDU INC , , , YHOO YAHOO INC ,049 NM 4, , EBAY EBAY INC , , , FB FACEBOOK INC , , , NTES NETEASE INC , , , LNKD LINKEDIN CORP ,592 NM 3, BABA ALIBABA GROUP HLDG , , , TWTR TWITTER INC ,090 NM 2, AKAM AKAMAI TECHNOLOGIES INC , , The peer group comparison is based on Major Internet Software & Services companies of comparable size. PAGE 2

3 SDAQ: COMPANY DESCRIPTION Alphabet Inc., through its subsidiaries, provides online advertising services in the United States, the United Kingdom, and rest of the world. The company offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal Internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome, and Google Play, as well as technical infrastructure and newer efforts, such as Virtual Reality. This segment also sells hardware products comprising Chromecast, Chromebooks, and Nexus. The Other Bets segment includes businesses, such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X, and other initiatives. Alphabet Inc. was founded in 1998 and is headquartered in Mountain View, California Amphitheatre Parkway Mountain View, CA USA Phone: STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 3.5 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 60% of the stocks we rate. Total Return 3.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 50% of the companies we cover. Efficiency 5.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 90% of the companies we review. Price volatility 4.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 70% of the stocks we monitor. Solvency 5.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze. Income 0.5 out of 5 stars Measures dividend yield and payouts to shareholders. This company pays no dividends. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 SDAQ: Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINCIAL ALYSIS 's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. is extremely liquid. Currently, the Quick Ratio is 4.99 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year Q2 FY E 2016(E) E 2017(E) During the same period, stockholders' equity ("net worth") has increased by 13.94% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) 20, , EBITDA ($mil) 6, , EBIT ($mil) 5, , Net Income ($mil) 4, , STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit BALANCE SHEET Cash & Equiv. ($mil) 75, , Total Assets ($mil) 149, , Total Debt ($mil) 5, , Equity ($mil) 123, , PROFITABILITY Gross Profit Margin 69.01% 69.99% EBITDA Margin 33.13% 32.58% Operating Margin 26.37% 25.77% Sales Turnover Return on Assets 11.37% 10.70% Return on Equity 13.78% 12.50% DEBT Current Ratio Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % Avg Daily Volume 1,808,057 2,278,709 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 SDAQ: RATINGS HISTORY Our rating for was upgraded from Hold to Buy today. As of 7/18/2016, the stock was trading at a price of which is 7.1% below its 52-week high of $ and 29.9% above its 52-week low of $ Year Chart HOLD: $ BUY: $ BUY: $800 $700 $600 $500 MOST RECENT RATINGS CHANGES Date Price Action From To 7/18/16 Upgrade Hold Buy 5/24/16 $ Downgrade Buy Hold 3/29/16 $ Upgrade Hold Buy 4/28/15 $ Initiated -- Hold Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 7/18/2016) 38.70% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months % Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: VALUATION BUY. The current P/E ratio indicates a discount compared to an average of for the Internet Software & Services industry and a premium compared to the S&P 500 average of To use another comparison, its price-to-book ratio of 4.08 indicates a premium versus the S&P 500 average of 2.81 and a discount versus the industry average of The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings Peers Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. is trading at a discount to its peers. Price/Projected Earnings 9.30 Peers Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. is trading at a significant discount to its peers. Price/Book 4.08 Peers 5.43 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a discount to its peers. Price/Sales 6.46 Peers 8.86 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a significant discount to its industry on this measurement. DISCLAIMER: Price/CashFlow Peers Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. is trading at a significant discount to its peers. Price to Earnings/Growth 0.16 Peers 0.25 Discount. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a significant discount to its peers. Earnings Growth lower higher Peers Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher Peers Lower. A sales growth rate that trails the industry implies that a company is losing market share. significantly trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5