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Alphabet Class A (GOOGL)
NASDAQ:GOOGL

Alphabet Class A (GOOGL) AI Stock Analysis

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Alphabet Class A

(NASDAQ:GOOGL)

Rating:85Outperform
Price Target:
$194.00
▲(14.77%Upside)
Alphabet's stock is rated highly due to its strong financial performance, robust growth in various segments, and strategic corporate actions. Technical indicators and a fair valuation further support a positive outlook, despite some challenges in advertising revenue and increased expenses.
Positive Factors
AI Innovation
The keynote presentation left analysts increasingly constructive on Alphabet’s long-term strategic positioning across AI innovation.
Cloud Business Performance
GOOGL's cloud business leads performance despite supply constraints, aiming for significant AI-related investment.
Cost Efficiency
Management's effort on cost efficiency provides potential upside to the margin.
Negative Factors
Ads Business Revenue Forecast
A reduction in revenue growth forecast for the ads business due to strong ads demand and newly implemented tariffs.
Query Share Risk
The biggest risk to Google remains query share loss to Open AI.
Traditional Search Disruption
There are heightened investor fears and debate around potential disruption of traditional search with the rise of AI, including increased competition, changes to user behavior, and monetization potential.

Alphabet Class A (GOOGL) vs. SPDR S&P 500 ETF (SPY)

Alphabet Class A Business Overview & Revenue Model

Company DescriptionAlphabet 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 MoneyAlphabet Inc. primarily generates revenue through its subsidiary Google, with the majority coming from advertising services. Google's advertising revenue is driven by ads displayed on its search engine, as well as on partner websites through the Google AdSense program. Additionally, Alphabet earns substantial income from its YouTube platform, which monetizes through advertisements and subscription services like YouTube Premium. The company also generates revenue from its Google Cloud services, which offer cloud computing solutions to businesses. Other Alphabet ventures, such as its 'Other Bets' segment, contribute to revenue through varied business models, including investments in life sciences and technology innovations, though these are less significant compared to Google's advertising and cloud services. Key partnerships and collaborations, such as those with smartphone manufacturers for Android OS, also play a role in its revenue generation.

Alphabet Class A Key Performance Indicators (KPIs)

Any
Any
Cloud Operating Margin
Cloud Operating Margin
Reveals profitability of the Google Cloud segment, indicating how well Alphabet is managing costs and scaling its cloud business.
Chart InsightsAlphabet's Cloud Operating Margin has turned positive since early 2023, showing substantial improvement and reaching 17.8% by early 2025. This turnaround aligns with a 30% year-over-year increase in Google Cloud revenue, driven by AI advancements and infrastructure expansion. However, the company faces challenges with cloud capacity constraints, which could impact future growth. Despite these constraints, Alphabet's strategic investments in AI and technical infrastructure signal a commitment to sustaining this upward momentum in cloud profitability.
Data provided by:Main Street Data

Alphabet Class A Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: 6.12%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Positive
The earnings call presented a predominantly positive outlook with strong revenue growth across major segments, significant advancements in AI technology, and milestones for YouTube and Waymo. However, challenges such as a decline in network advertising revenue, increased depreciation expenses, and potential headwinds in ad revenues due to macroeconomic factors were acknowledged.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Alphabet Inc. reported consolidated revenues of $90.2 billion for Q1 2025, an increase of 12% year-over-year, with Search, YouTube advertising, subscription platforms, and Google Cloud all experiencing double-digit growth.
AI Innovations and Adoption
AI advancements such as AI Overviews have been well received, with over 1.5 billion users monthly. The Gemini 2.5 Pro AI model has been launched, achieving high performance and recognition within the industry.
YouTube and Waymo Milestones
YouTube celebrated its twentieth anniversary with over 1 billion monthly active podcast users and 125 million subscribers to YouTube Music and Premium. Waymo is now serving over a quarter of a million paid passenger trips weekly, a fivefold increase from the previous year.
Google Cloud Growth
Google Cloud revenues increased by 28% to $12.3 billion, driven by growth in GCP core and AI products.
Operating Income and Margin Expansion
Operating income increased by 20% to $31 billion, and the operating margin increased to 33.9%, reflecting strong revenue growth and a favorable mix shift.
Negative Updates
Network Revenue Decline
Network advertising revenue decreased by 2% to $7.3 billion, reflecting a year-over-year decline.
Increased Depreciation Expenses
Depreciation expenses increased significantly, putting pressure on the income statement, with expectations for further acceleration throughout 2025.
Headwinds in Advertising Revenue
Uncertainties in the macro environment and changes to de minimis exemption are expected to create slight headwinds in advertising revenue, particularly affecting APAC-based retailers.
Company Guidance
During the first quarter of 2025, Alphabet Inc. reported strong financial performance with notable metrics highlighted during their earnings call. Consolidated revenues reached $90.2 billion, marking a 12% increase year-over-year, with Google services revenues growing by 10% to $77.3 billion and Google Cloud revenue increasing by 28% to $12.3 billion. The company's operating income rose by 20% to $31 billion, resulting in an operating margin of 33.9%. Subscriptions surpassed 270 million, driven by YouTube and Google One, while AI Overviews reached over 1.5 billion monthly users. The company also celebrated YouTube's 20th anniversary, with YouTube Music and Premium reaching over 125 million subscribers. Additionally, Waymo reported over a quarter of a million paid passenger trips weekly, a fivefold increase from the previous year. Despite facing headwinds from increased depreciation expenses, Alphabet continues to focus on productivity and efficiency to support its investment in AI and other growth areas.

Alphabet Class A Financial Statement Overview

Summary
Alphabet demonstrates exceptional financial performance with strong revenue growth, high profitability margins, a robust balance sheet with low leverage, and efficient cash flow generation. These factors reflect a financially stable and growing entity in the industry.
Income Statement
92
Very Positive
Alphabet's income statement shows impressive financial health with a strong gross profit margin of 58.6% and a net profit margin of 30.9% for TTM. The company’s revenue growth rate is robust at 16.9% over the past year, indicating strong market demand and operational efficiency. The EBIT margin of 32.7% and EBITDA margin of 37.3% further highlight Alphabet's profitability. This combination of growth and high margins reflects a well-managed, profitable enterprise with a strong competitive position in the industry.
Balance Sheet
88
Very Positive
Alphabet maintains a solid balance sheet with a low debt-to-equity ratio of 0.07, indicating minimal financial leverage and a strong equity position. The equity ratio of 72.6% reflects a robust capital structure primarily funded by equity. Return on Equity (ROE) is high at 32.1%, showing efficient use of shareholder funds to generate profits. Overall, Alphabet's balance sheet is strong, with ample liquidity and low financial risk.
Cash Flow
90
Very Positive
The cash flow statement reveals strong cash management practices with a free cash flow growth rate of 2.9%, indicating Alphabet's ability to generate and grow cash flows. The operating cash flow to net income ratio of 1.2 shows that the company converts a significant portion of its income to cash, enhancing its financial flexibility. Additionally, the free cash flow to net income ratio of 0.67 suggests solid cash flow generation relative to profits, supporting future growth initiatives and shareholder returns.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
359.71B350.02B307.39B282.84B257.64B182.53B
Gross Profit
210.76B203.71B174.06B156.63B146.70B97.80B
EBIT
117.52B112.39B84.29B74.84B78.71B41.22B
EBITDA
149.88B135.39B97.97B91.33B103.52B61.91B
Net Income Common Stockholders
111.00B100.12B73.80B59.97B76.03B40.27B
Balance SheetCash, Cash Equivalents and Short-Term Investments
95.33B95.66B110.92B113.76B139.65B136.69B
Total Assets
475.37B450.26B402.39B365.26B359.27B319.62B
Total Debt
23.56B25.46B27.12B29.68B26.21B25.08B
Net Debt
300.00M2.00B3.07B7.80B5.26B-1.39B
Total Liabilities
130.11B125.17B119.01B109.12B107.63B97.07B
Stockholders Equity
345.27B325.08B283.38B256.14B251.63B222.54B
Cash FlowFree Cash Flow
74.88B72.76B69.50B60.01B67.01B42.84B
Operating Cash Flow
132.60B125.30B101.75B91.50B91.65B65.12B
Investing Cash Flow
-53.17B-45.54B-27.06B-20.30B-35.52B-32.77B
Financing Cash Flow
-80.22B-79.73B-72.09B-69.76B-61.36B-24.41B

Alphabet Class A Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price169.03
Price Trends
50DMA
160.10
Positive
100DMA
171.61
Negative
200DMA
170.97
Negative
Market Momentum
MACD
3.29
Negative
RSI
55.97
Neutral
STOCH
57.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOOGL, the sentiment is Neutral. The current price of 169.03 is above the 20-day moving average (MA) of 164.78, above the 50-day MA of 160.10, and below the 200-day MA of 170.97, indicating a neutral trend. The MACD of 3.29 indicates Negative momentum. The RSI at 55.97 is Neutral, neither overbought nor oversold. The STOCH value of 57.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GOOGL.

Alphabet Class A Risk Analysis

Alphabet Class A disclosed 28 risk factors in its most recent earnings report. Alphabet Class A 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 A Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
85
Outperform
$2.09T19.1534.79%0.47%13.02%37.73%
84
Outperform
$2.09T19.2834.79%0.46%13.02%37.73%
80
Outperform
$1.63T25.2639.83%0.31%19.37%47.56%
77
Outperform
$21.59B11.5948.41%17.81%1175.52%
77
Outperform
$133.55B107.4824.28%16.07%
68
Neutral
$29.20B8.129.85%-1.33%32.92%
61
Neutral
$14.28B5.89-4.20%3.70%2.73%-35.75%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GOOGL
Alphabet Class A
169.03
-3.93
-2.27%
BIDU
Baidu
83.06
-11.79
-12.43%
META
Meta Platforms
670.90
195.64
41.16%
GOOG
Alphabet Class C
170.37
-3.93
-2.25%
SPOT
Spotify Technology SA
672.00
345.32
105.71%
PINS
Pinterest
31.91
-8.77
-21.56%

Alphabet Class A Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Alphabet Inc. Completes €6.75 Billion Bond Offering
Positive
May 6, 2025

On May 6, 2025, Alphabet Inc. successfully completed its euro-denominated bond offering, raising a total of €6.75 billion through the issuance of notes with varying maturities and interest rates. This strategic financial move is expected to enhance Alphabet’s capital structure and provide additional resources for its ongoing operations and growth initiatives.

M&A TransactionsBusiness Operations and Strategy
Alphabet Class A to Acquire Wiz for $32 Billion
Positive
Mar 18, 2025

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.

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.