Alphabet (GOOGL) AI Stock Analysis

• Market Cap: $1.80T
• Dividend Yield: 0.55%
• Average Volume (3M): 37.90M
• Price to Earnings (P/E): 18.2
• Beta (1Y): 0.94
• Revenue Growth: 13.89%
• EPS Growth: 38.99%
• Country: US
• Employees: 183,323
• Sector: Communication Services
• Sector Strength: 98
• Industry: Internet Content & Information
• EPS (TTM): 8.05
• Shares Outstanding: 5,833,000,000
• 10 Day Avg. Volume: 42,241,504
• 30 Day Avg. Volume: 37,902,636
• PEG Ratio: 0.47
• Price to Book (P/B): N/A
• Price to Sales (P/S): 5.71
• Price to Cash Flow (P/CF): 12.80
• P/FCF Ratio: 12.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $205.15
• Price Target Upside: 34.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 37

Alphabet's strong financial performance and strategic investments in AI and cloud security are significant positives. The company's robust revenue growth, high profitability margins, and efficient cash flow management support its competitive position. However, technical indicators suggest some short-term challenges, and potential revenue headwinds could impact future performance. Overall, Alphabet is well-positioned for growth, with strategic initiatives likely to drive long-term success.

Positive Factors

Cloud Growth

The expansion of product capabilities and new AI demand have positioned Cloud as a long-term growth engine within Alphabet’s portfolio.

Monetization and Ad Clicks

New AI Overviews and features like AI mode and travel planning could drive higher monetization and more ad clicks.

Valuation

Alphabet is trading at a lower multiple compared to the S&P 500, suggesting potential undervaluation.

Negative Factors

AI Brand Competition

Google Gemini's potential AI brand deficit to OpenAI, which has 20mn subscribers and 400mn users, is a risk.

Capex Concerns

Alphabet stock has been lagging peers partially due to a 4Q cloud miss and growing capex concerns.

Market Share

Google's global search share declined 44bps m/m, indicating a loss of market share.

Alphabet Business Overview & Revenue Model

Company Description

Alphabet Inc. provides 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 offers products and services, including ads, Android, Chrome, hardware, 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 store; and Fitbit wearable devices, Google Nest home products, Pixel phones, and other devices, as well as in the provision of YouTube non-advertising services. The Google Cloud segment offers infrastructure, platform, and other services; Google Workspace that include cloud-based collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells health technology and internet services. The company was founded in 1998 and is headquartered in Mountain View, California.

How the Company Makes Money

Alphabet Inc. primarily generates revenue through digital advertising, which accounts for the majority of its income. Google Ads, AdSense, and YouTube advertising are key components of this revenue stream, leveraging Google's search engine and video platform to connect advertisers with a vast audience. Additionally, Alphabet earns money through its Google Cloud services, which provide businesses with infrastructure and platform services. Other revenue streams include hardware sales, such as Google Pixel phones and Nest smart home devices, and non-advertising revenue from sources like Google Play Store transactions. Strategic partnerships, investments in emerging technologies, and acquisitions further enhance Alphabet's ability to diversify and strengthen its revenue base.

Alphabet Financial Statement Overview

Summary

Alphabet demonstrates robust financial performance with strong revenue growth of 13.83% and high profitability margins, including a net profit margin of 28.62%. The balance sheet is stable with low leverage, evidenced by a debt-to-equity ratio of 0.07, and cash flow generation is healthy with a free cash flow growth rate of 4.70%.

Income Statement

Alphabet exhibits strong financial performance with a consistent growth trajectory. The TTM (Trailing-Twelve-Months) Gross Profit Margin stands at 58.24%, reflecting efficient cost management. The Net Profit Margin of 28.62% indicates robust profitability. Revenue Growth Rate is impressive at 13.83% from the previous year, showcasing solid top-line expansion. The EBIT Margin of 32.12% and EBITDA Margin of 37.11% further underscore operational efficiency. Overall, Alphabet's income statement metrics highlight strong growth and profitability.

Balance Sheet

Alphabet's balance sheet reveals a stable financial position with a Debt-to-Equity Ratio of 0.07, signifying low leverage and strong equity backing. The Return on Equity (ROE) is solid at 30.79%, indicating effective utilization of shareholders' equity to generate profits. The Equity Ratio stands at 72.19%, highlighting a well-capitalized balance sheet with significant equity relative to total assets. These metrics reflect Alphabet's financial stability and prudent capital structure, though the slight reduction in cash reserves could be monitored.

Cash Flow

Alphabet demonstrates strong cash flow generation capabilities with a Free Cash Flow Growth Rate of 4.70%, indicating healthy cash flow expansion. The Operating Cash Flow to Net Income Ratio is 1.25, reflecting efficient conversion of accounting profits into cash. The Free Cash Flow to Net Income Ratio is 0.73, showcasing substantial free cash flow relative to net income. These metrics illustrate Alphabet's ability to generate and manage cash flows effectively, supporting future growth initiatives.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
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
112.39B	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 Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 152.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOOGL, the sentiment is Negative. The current price of 152.82 is below the 20-day moving average (MA) of 158.45, below the 50-day MA of 171.75, and below the 200-day MA of 173.47, indicating a bearish trend. The MACD of -5.18 indicates Positive momentum. The RSI at 37.10 is Neutral, neither overbought nor oversold. The STOCH value of 18.71 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GOOGL.

Alphabet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
META	86 Outperform	$1.31T	21.64	37.14%	0.34%	21.94%	61.97%
GOOG	83 Outperform	$1.95T	20.02	32.91%	0.50%	13.89%	38.99%
GOOGL	82 Outperform	$1.80T	18.24	32.91%	0.55%	13.89%	38.99%
BIDU	76 Outperform	$28.08B	8.79	9.14%	―	-2.60%	16.71%
PINS	76 Outperform	$19.09B	10.41	47.49%	―	19.35%	―
SPOT	75 Outperform	$114.26B	93.13	28.91%	―	18.36%	―
Sector *	58 Neutral	$26.94B	3.15	-10.67%	4.32%	2.14%	-43.11%

Alphabet Corporate Events

Alphabet Class A to Acquire Wiz for $32 Billion

On March 18, 2025, Google LLC announced its agreement to acquire Wiz, Inc., a prominent cloud security platform, for $32 billion in an all-cash transaction. This acquisition, expected to close in 2026, will integrate Wiz into Google Cloud, enhancing its security offerings and multicloud capabilities. The acquisition aims to bolster Google’s position in the rapidly growing cloud security market by improving security automation and reducing costs for customers. Wiz’s solutions will remain compatible with major cloud platforms, and the deal underscores the increasing importance of cybersecurity in the AI era.