Alphabet Class C (GOOG) AI Stock Analysis

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Alphabet Class C

(NASDAQ:GOOG)

85Outperform

Alphabet Class C showcases strong financial health, with impressive income growth and profitability. The earnings call further supports optimism with robust growth in AI and cloud sectors. Despite mixed technical indicators and some concerns in advertising, the company's solid fundamentals and fair valuation contribute to a high overall stock score.

Positive Factors

Cloud Growth

Google Cloud revenue grew by 28% year over year, driven by growth in core products, AI infrastructure, and Gen AI solutions.

Operating Performance

Alphabet's operating income increased by 20% year over year, primarily due to effective control in selling and marketing expenses.

Share Repurchase Program

The company initiated a $70 billion share repurchase program, indicating confidence in its valuation and future performance.

Negative Factors

Ad Business Challenges

Management noted several headwinds for ad businesses, including a decline in ad budget from certain APAC-based retailers.

Antitrust Issues

Google lost parts of the AdTech anti-trust trial with the judge finding Google liable for monopolization of both the publisher ad server market and the ad exchange market.

Capital Expenditures

Management expects the increase in capital expenditures will continue to drag earnings growth, as depreciation growth will accelerate.

Alphabet Class C (GOOG) vs. S&P 500 (SPY)

Market Cap

$2.00T

Dividend Yield0.48%

Average Volume (3M)25.03M

Price to Earnings (P/E)18.5

Beta (1Y)0.98

Revenue Growth13.02%

EPS Growth37.73%

CountryUS

Employees185,719

SectorCommunication Services

Sector Strength83

IndustryInternet Content & Information

Share Statistics

EPS (TTM)2.81

Shares Outstanding5,459,000,000

10 Day Avg. Volume21,278,449

30 Day Avg. Volume25,034,939

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.93

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit9.10

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$202.57

Price Target Upside22.17% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering16

Alphabet Class C Business Overview & Revenue Model

Company DescriptionAlphabet Inc., through its Class C shares (GOOG), operates as a global technology leader, primarily known for its search engine, Google. The company is headquartered in Mountain View, California, and functions through various segments including Google Services, Google Cloud, and Other Bets. Google Services encompasses core products such as Search, YouTube, Google Maps, Google Play, and the Android operating system. Google Cloud provides infrastructure and data analytics services, while Other Bets focuses on emerging businesses like Waymo, Verily, and more. Alphabet's mission is to organize the world's information and make it universally accessible and useful.

How the Company Makes MoneyAlphabet Inc. generates revenue primarily through advertising services, which constitute the majority of its total earnings. Advertising revenue comes from Google Search, YouTube ads, and partner sites in the Google Network through AdSense and AdMob. The company leverages its vast data analytics capabilities to provide targeted advertising, enhancing ad performance and user engagement. Additionally, Alphabet earns revenue from its Google Cloud segment by offering cloud computing services, including storage, data management, and machine learning capabilities. Other revenue streams include hardware sales, such as Pixel phones and Nest products, as well as digital content and apps sold on the Google Play Store. Strategic partnerships and investments in various sectors also contribute to Alphabet's financial success.

Alphabet Class C Financial Statement Overview

Summary

Alphabet Class C's financials reflect a well-managed, highly profitable company with strong growth prospects. The income statement highlights impressive margins and revenue trajectory. The balance sheet shows low leverage and high equity, providing financial stability. Cash flow metrics indicate robust cash generation and conversion efficiency, supporting overall financial health.

Income Statement

―

Alphabet Class C demonstrates strong financial performance with impressive growth metrics. The TTM gross profit margin is 58.6%, while the net profit margin stands at 30.9%, indicating high profitability. Revenue growth has been stable, with a notable 17.1% increase from 2023 to 2024. The EBIT margin is a robust 32.7%, and the EBITDA margin is 37.3%, reflecting efficient operations and cost management.

Balance Sheet

The company's balance sheet is solid, with a low debt-to-equity ratio of 0.07, showcasing prudent financial leverage. Return on equity (ROE) is strong at 32.1%, indicating effective use of equity capital. The equity ratio is 72.6%, underscoring financial stability and limited reliance on external debt.

Cash Flow

―

Alphabet maintains robust cash flow performance with a healthy operating cash flow to net income ratio of 1.2. The free cash flow growth rate is 2.9%, demonstrating consistent cash generation capabilities. The free cash flow to net income ratio is 0.67, highlighting efficient cash conversion from net income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
350.02B	307.39B	282.84B	257.64B	182.53B
	Gross Profit
203.71B	174.06B	156.63B	146.70B	97.80B
	EBIT
112.39B	84.29B	74.84B	78.71B	41.22B
	EBITDA
135.39B	97.97B	91.33B	103.52B	61.91B
	Net Income Common Stockholders
100.12B	73.80B	59.97B	76.03B	40.27B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
95.66B	110.92B	113.76B	139.65B	136.69B
	Total Assets
450.26B	402.39B	365.26B	359.27B	319.62B
	Total Debt
25.46B	27.12B	29.68B	26.21B	25.08B
	Net Debt
2.00B	3.07B	7.80B	5.26B	-1.39B
	Total Liabilities
125.17B	119.01B	109.12B	107.63B	97.07B
	Stockholders Equity
325.08B	283.38B	256.14B	251.63B	222.54B
Cash Flow		Free Cash Flow
72.76B	69.50B	60.01B	67.01B	42.84B
	Operating Cash Flow
125.30B	101.75B	91.50B	91.65B	65.12B
	Investing Cash Flow
-45.54B	-27.06B	-20.30B	-35.52B	-32.77B
	Financing Cash Flow
-79.73B	-72.09B	-69.76B	-61.36B	-24.41B

Alphabet Class C Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price165.81

Price Trends

50DMA

163.47

Positive

100DMA

178.41

Negative

200DMA

172.94

Negative

Market Momentum

MACD

0.38

Negative

RSI

56.50

Neutral

STOCH

80.04

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOOG, the sentiment is Neutral. The current price of 165.81 is above the 20-day moving average (MA) of 158.37, above the 50-day MA of 163.47, and below the 200-day MA of 172.94, indicating a neutral trend. The MACD of 0.38 indicates Negative momentum. The RSI at 56.50 is Neutral, neither overbought nor oversold. The STOCH value of 80.04 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GOOG.

Alphabet Class C Risk Analysis

Alphabet Class C disclosed 28 risk factors in its most recent earnings report. Alphabet Class C reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Alphabet Class C Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GOOG	85 Outperform	$2.00T	18.49	34.79%	0.48%	13.02%	37.73%
GOOGL	85 Outperform	$2.00T	18.29	34.79%	0.49%	13.02%	37.73%
META	80 Outperform	$1.50T	23.29	39.83%	0.34%	19.37%	47.56%
SPOT	77 Outperform	$129.30B	104.06	24.28%	―	16.07%	―
PINS	76 Outperform	$18.19B	9.94	47.49%	―	19.35%	―
BIDU	73 Outperform	$31.65B	9.81	9.14%	―	-2.60%	16.71%
Sector *	59 Neutral	$13.76B	7.65	-2.42%	3.86%	2.19%	-37.76%

* Communication Services Sector Average

Performance Comparison

GOOG

Alphabet Class C

166.05

-2.98

-1.76%

BIDU

Baidu

90.26

-23.07

-20.36%

Alphabet Class C Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 2.69%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Positive

The earnings call highlighted significant growth across Alphabet's business segments, particularly in AI and cloud initiatives, with strong revenue and user engagement metrics. While there are concerns about network advertising declines and increasing depreciation expenses, the positive momentum in key areas like YouTube, Google Cloud, and AI developments suggest an overall positive sentiment.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Alphabet Inc. reported consolidated revenues of $90.2 billion, representing a 12% increase year-over-year, with a 14% increase in constant currency.

AI Initiatives Drive Growth

AI Overviews now has over 1.5 billion users per month, and Gemini 2.5 has been recognized as the best AI model in the industry. Active users in AI Studio and Gemini API have grown over 200% since the beginning of the year.

Strong Performance in Google Cloud

Google Cloud revenue increased by 28% to $12.3 billion, with an operating income increase to $2.2 billion and operating margin rising to 17.8%.

YouTube and Subscription Growth

YouTube Music and Premium reached over 125 million subscribers, and YouTube advertising revenues increased by 10% to $8.9 billion.

Waymo Expansion

Waymo is now serving over a quarter of a million paid passenger trips each week, a 5x increase from a year ago, with expansion plans in Atlanta and other cities.

Negative Updates

Network Advertising Decline

Network advertising revenues declined by 2% to $7.3 billion.

Increasing Depreciation Expenses

Depreciation expenses increased by over $1 billion year-over-year, with expectations for further acceleration throughout 2025.

Challenges in Ad Revenue Growth

Potential headwinds in ad revenue growth due to changes in the de minimis exemption impacting APAC-based retailers.

Company Guidance

During the first quarter of 2025 earnings call, Alphabet Inc. provided several forward-looking metrics and insights into its business operations across various segments. The company reported consolidated revenues of $90.2 billion, marking a 12% year-over-year increase, with Google Services contributing $77.3 billion driven by a 10% increase in both Search and YouTube advertising revenues. Google Cloud revenue surged by 28% to $12.3 billion, reflecting strong demand for AI and core products. Subscription platforms and device revenues grew 19% to $10.4 billion, attributed largely to YouTube subscriptions and Google One. Operating income rose by 20% to $31 billion, with an operating margin increase to 33.9%, benefiting from revenue growth and cost management. The company highlighted the successful deployment of its Gemini 2.5 AI model, which has enhanced performance across its product lines, including Search, where AI Overviews now serves over 1.5 billion users monthly. Alphabet anticipates continued investments in AI and cloud infrastructure, with approximately $75 billion planned for 2025 CapEx, to support sustained growth and innovation.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.