Alphabet Class C (GOOG) AI Stock Analysis

• Market Cap: $2.46T
• Dividend Yield: 0.4%
• Average Volume (3M): 23.16M
• Price to Earnings (P/E): 21.7
• Beta (1Y): 1.06
• Revenue Growth: 13.19%
• EPS Growth: 34.51%
• Country: US
• Employees: 185,719
• Sector: Communication Services
• Sector Strength: 90
• Industry: Internet Content & Information
• EPS (TTM): 2.31
• Shares Outstanding: 5,430,000,000
• 10 Day Avg. Volume: 21,564,133
• 30 Day Avg. Volume: 23,156,208
• PEG Ratio: 0.62
• Price to Book (P/B): 7.17
• Price to Sales (P/S): 6.66
• P/FCF Ratio: 32.05
• Enterprise Value/Market Cap: 0.86
• Enterprise Value/Revenue: 5.68
• Enterprise Value/Gross Profit: 9.64
• Enterprise Value/Ebitda: 13.38
• 1Y Price Target: $219.36
• Price Target Upside: 7.45% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

• Rating: 82 Outperform
• Price Target: $224.00 ▲(9.72% Upside)

Alphabet's stock score is primarily driven by its strong financial performance and positive earnings call highlights. The company's robust revenue growth, particularly in AI and cloud segments, supports its high score. Technical analysis indicates potential overbought conditions, and valuation metrics suggest the stock is fairly valued. These factors together result in a solid overall stock score.

Positive Factors

AI and Cloud Growth

Google Cloud revenue increased by 32% YoY to US$13.6bn in 2Q25, 4% ahead of consensus estimate, mainly thanks to the strong growth in Google Cloud Platform across core and AI products.

Earnings

Strong second-quarter results for Alphabet, with accelerated cloud growth and increased scale in AI search products, support a bullish view on the company's shares.

Financial Performance

Net income grew by 19% YoY to US$28.2bn, beating consensus estimate by 5% thanks to the strong revenue growth and efficiencies in the expense base.

Negative Factors

Capital Expenditure

The increase in capex will address the robust demand for Google Cloud but also put pressure on margin.

Financial Risk

There is potential for a 5-10% headwind to Alphabet's GAAP EPS due to the legal remedies, which poses a risk to the company's financial performance.

Legal Concerns

Investors are concerned about the potential negative impact of the Judge’s remedy on Alphabet, which could include prohibition of exclusionary practices and preloading of Google Search, affecting the company's revenue.

Alphabet Class C Business Overview & Revenue Model

Company Description

Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.

How the Company Makes Money

Alphabet Inc. primarily generates revenue through advertising, which accounts for the majority of its earnings. The company earns significant income from Google Ads, where businesses pay for ad placements on Google's search engine results pages and across its vast network of partner websites. YouTube also contributes to ad revenue through video advertisements. In addition to advertising, Alphabet earns money from its Google Cloud services, offering scalable and secure cloud solutions to businesses and organizations. The company's hardware products, such as Pixel phones and Google Nest smart home devices, contribute to its revenue streams. Furthermore, Alphabet's Other Bets segment, though not yet profitable, explores new technologies and potential future revenue sources. Strategic partnerships and collaborations with various industries enhance its earning potential and facilitate the development of innovative solutions.

Alphabet Class C Financial Statement Overview

Summary

Alphabet demonstrates strong financial performance with robust revenue growth, high profitability, and a solid balance sheet. The income statement shows a TTM gross profit margin of 58.95% and a net profit margin of 31.11%. The balance sheet reflects a low debt-to-equity ratio of 0.10 and a high return on equity of 31.85%. Cash flow is healthy with a free cash flow growth of 9.35% TTM.

Income Statement

Alphabet's income statement shows robust financial health with high profitability and significant growth. The TTM (Trailing-Twelve-Months) gross profit margin is 58.95%, indicating efficient cost management. A strong net profit margin of 31.11% highlights excellent profitability. Revenue growth is commendable, with a 6.1% increase from the previous year. EBIT and EBITDA margins are solid at 32.67% and 40.33% respectively, showcasing strong operational performance.

Balance Sheet

The balance sheet reflects a strong financial position with a low debt-to-equity ratio of 0.10, suggesting minimal leverage risks. The return on equity (ROE) is impressive at 31.85%, indicating effective use of equity capital. The equity ratio is high at 72.28%, pointing to a strong capital structure with substantial shareholder's equity relative to total assets.

Cash Flow

Alphabet's cash flow statement demonstrates strong cash generation and prudent capital deployment. The free cash flow in TTM grew by 9.35% compared to the previous period. The operating cash flow to net income ratio is 1.16, indicating healthy cash flow from operations relative to net income. The free cash flow to net income ratio is 0.58, showcasing good free cash flow relative to net income, supporting future growth and investment.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	371.40B	350.02B	307.39B	282.84B	257.64B	182.53B
Gross Profit	218.91B	203.71B	174.06B	156.63B	146.70B	97.80B
EBITDA	157.75B	135.39B	97.97B	85.16B	103.52B	61.91B
Net Income	115.57B	100.12B	73.80B	59.97B	76.03B	40.27B
Balance Sheet
Total Assets	502.05B	450.26B	402.39B	365.26B	359.27B	319.62B
Cash, Cash Equivalents and Short-Term Investments	95.15B	95.66B	110.92B	113.76B	139.65B	136.69B
Total Debt	41.67B	25.46B	27.12B	29.68B	28.39B	26.77B
Total Liabilities	139.14B	125.17B	119.01B	109.12B	107.63B	97.07B
Stockholders Equity	362.92B	325.08B	283.38B	256.14B	251.63B	222.54B
Cash Flow
Free Cash Flow	66.73B	72.76B	69.50B	60.01B	67.01B	42.84B
Operating Cash Flow	133.71B	125.30B	101.75B	91.50B	91.65B	65.12B
Investing Cash Flow	-74.93B	-45.54B	-27.06B	-20.30B	-35.52B	-32.77B
Financing Cash Flow	-65.16B	-79.73B	-72.09B	-69.76B	-61.36B	-24.41B

Alphabet Class C Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 204.16
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOOG, the sentiment is Positive. The current price of 204.16 is above the 20-day moving average (MA) of 194.95, above the 50-day MA of 183.58, and above the 200-day MA of 177.64, indicating a bullish trend. The MACD of 5.56 indicates Negative momentum. The RSI at 70.28 is Negative, neither overbought nor oversold. The STOCH value of 89.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GOOG.

Alphabet Class C Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GOOGL	84 Outperform	$2.46T	21.66	34.83%	0.40%	13.19%	34.51%
META	83 Outperform	$1.98T	28.61	40.65%	0.26%	19.38%	40.62%
GOOG	82 Outperform	$2.46T	21.75	34.83%	0.40%	13.19%	34.51%
PINS	76 Outperform	$23.68B	12.44	48.08%	―	17.00%	901.05%
BIDU	75 Outperform	$30.25B	8.71	9.85%	―	-1.33%	32.92%
SPOT	73 Outperform	$139.74B	162.63	13.94%	―	15.52%	67.15%
Sector *	60 Neutral	$43.99B	4.24	-10.43%	4.00%	2.31%	-34.39%