Alphabet posts strong growth despite higher costs and regulatory pressure – shares poised for further gains

Alphabet ranks fifth by market capitalisation among publicly traded US companies and generates over 90 billion USD in quarterly revenue. It continues to deliver double-digit growth rates, supporting further share price appreciation for GOOG.

Alphabet Inc. (NASDAQ: GOOG) reported strong Q2 2025 results, with revenue rising 14% year-on-year to 96.4 billion USD and earnings per share reaching 2.31 USD, beating forecasts. The company delivered solid growth across key segments, including a 32% increase in Google Cloud revenue and double-digit growth in Google Search and YouTube advertising, supported by the active integration of AI technologies. However, investor reaction was cautious due to a sharp rise in capital expenditure, which is expected to reach 85 billion USD in 2025, as well as widening operating losses in the Other Bets segment. While shares initially rose by 3.4% following the report, they gave up most of those gains by the close, as concerns mounted over future margins and regulatory risks. Still, Alphabet’s strong position in AI and cloud technologies continues to underpin its long-term growth outlook.

This article examines Alphabet Inc.’s business model, outlines the company’s primary sources of revenue and summarises its performance during the 2024 calendar year. It also presents key financial data from Q1 and Q2 2025 and includes a technical analysis of GOOG shares, which forms the basis for Alphabet’s stock forecast for the calendar year 2025.

About Alphabet Inc.

Alphabet Inc. was established on 2 October 2015 through a restructuring of Google, which was founded by Larry Page and Sergey Brin in 1998. Google was originally a search engine but gradually evolved into a diversified technology company, covering advertising, cloud services, mobile platforms, and other areas.

By 2015, Google’s scope and diversification had made its management increasingly complex. As a result, a holding structure – Alphabet Inc. – was established, with Google becoming one of its divisions, focusing on core businesses (Search, YouTube, and Android). At the same time, innovative projects, such as Waymo and Verily, were spun off into separate companies under Alphabet’s management.

Since the restructuring, Alphabet has replaced Google as the listed public company on the stock exchange, retaining its existing tickers (GOOGL and GOOG). Larry Page became Alphabet’s CEO, Sergey Brin its President, and Pichai Sundararajan was appointed CEO of Google.

Alphabet is listed on the stock exchange under two tickers, GOOGL and GOOG:

• GOOGL (Class A) – voting shares. Holders of these shares are entitled to vote at shareholder meetings (1 share = 1 vote)
• GOOG (Class C) – non-voting shares. These shares provide the same economic rights (dividends, capital appreciation) but do not grant holders the right to participate in the company’s management.

Alphabet Inc.’s main revenue streams

Alphabet Inc., the parent company of Google and other subsidiaries, generates revenue from several business segments. The primary sources of revenue are outlined below:

• Google Search and others: revenue from advertisements placed on Google Search, Gmail, Google Maps, and other Google-owned services
• YouTube ads: revenue from banner ads, skippable and non-skippable video ads, and overlay ads on YouTube
• Subscriptions, platforms, and devices: revenue from subscription services, including YouTube Premium, YouTube TV, Google One, and NFL Sunday Ticket. This category also includes app sales, in-game purchases via the Google Play Store, and sales of hardware such as Pixel phones, Nest and Chromecast devices

• Other Bets: includes Alphabet’s ambitious ventures, such as Waymo (autonomous driving), Verily (healthcare), and GFiber (internet services), with the majority of revenue coming from the latter two. Although this segment contributes less to overall revenue, it focuses on long-term innovation and often operates at a loss
• Alphabet operations: this includes small currency-related hedging revenue and other corporate activities. This is not the primary segment but includes other income unrelated to the core segments

Advertising remains the primary source of Alphabet’s revenue, with Google services, notably Search and YouTube, leading the way. Google Cloud is a growing revenue stream, reflecting Alphabet’s commitment to developing solutions for companies, while other projects are speculative investments with a limited but increasing impact on revenues.

Alphabet Inc.’s financial position

Alphabet Inc. is in a strong financial position, reflecting both stability and strategic momentum. The company continues to deliver steady revenue growth, driven primarily by its advertising operations, particularly via Google Search and YouTube.

Alphabet closed 2024 with revenue of $ 350 billion, a 14% year-on-year increase. Net income rose by 28% to 100 billion USD.

Google Services, which include Search, YouTube, and other platforms, generated 84.1 billion USD in revenue in 2024, up 10% from 2023. The Google Cloud segment also expanded, reaching 12 billion USD, a 10% increase from the previous year.

Alphabet plans to invest around 75 billion USD in 2025, significantly higher than the 52 billion USD in 2024. The primary objective is to expand its AI infrastructure and capabilities. CEO Sundar Pichai emphasised the importance of AI across all the company’s products.

Alphabet Inc. Q1 2025 earnings report

On 24 April, Alphabet Inc. published its earnings report for Q1 2025, which ended on 31 March. The key figures are presented below, compared to the same period in 2024:

• Revenue: 90.2 billion USD (+12%)
• Net income: 34.5 billion USD (+46%)
• Earnings per share: 2.81 USD (+49%)
• Costs and expenses: 59.6 billion USD (+8%)
• Operating income: 30.6 billion USD (+20%)
• Operating margin: 34% (+200 basis points)

Revenue by segment:

• Google Services: 77.3 billion USD (+10%)
• Google Search & other: 50.7 billion USD (+10%)
• Google Search & other: 50.7 billion USD (+10%)
• YouTube ads: 8.9 billion USD (+10%)
• Google Network: 7.3 billion USD (-2%)
• Google subscriptions, platforms, and devices: 10.4 billion USD (+19%)

• Other Bets: 0.4 billion USD (-10%)

Alphabet’s Q1 2025 report showed resilient growth, enhancing the appeal of the company’s shares to investors. Revenue rose 12% year-on-year, driven by strong performance in its Search division, YouTube, and Google Cloud, while net profit increased by 46%.

The Search segment remains the primary source of revenue, with the rollout of AI Overviews reaching 1.5 billion monthly users, boosting engagement without undermining monetisation. YouTube continues to lead in the streaming segment, boasting a subscriber base of 270 million (across YouTube and Google One), which contributes to a steady stream of high-margin revenue. Google Cloud reported 28% revenue growth and a 17.8% margin, reinforcing the company’s strategic focus on AI infrastructure. The planned acquisition of Wiz for 32 billion USD, expected to close in 2026, will strengthen Alphabet’s cloud security position and enhance its competitiveness in the market.

Alphabet announced a 70 billion USD share buyback and a 5% increase in quarterly dividends, now at 0.21 USD per share, reflecting confidence in its outlook.

The company’s management did not provide specific guidance for Q2 2025, but the analyst consensus forecast expected revenue of 93.6 billion USD and earnings per share of 2.14 USD, indicating continued stable growth.

Chief Financial Officer Anat Ashkenazi highlighted the risks linked to tariffs, particularly affecting the advertising business in the Asia-Pacific region, but confirmed that capital expenditure in Q1 2025 (17.2 billion USD) was in line with the full-year plan. The company’s ongoing focus on innovation in Search, the expansion of its Cloud business, and the development of autonomous transport via Waymo (which now covers over 500 square miles) are creating multiple growth drivers.

Alphabet’s strong quarterly performance underscores its ability to adapt and grow even in a highly competitive environment. Its leadership in AI, continued growth in its Cloud division, and ongoing share buyback programs and dividend payouts make the company’s shares appealing to investors with a focus on future-facing technologies.

Alphabet Inc. Q2 2025 earnings report

On 23 July, Alphabet Inc. released its Q2 2025 earnings report for the quarter ended 30 June. The key figures, compared with the same period in 2024, are as follows:

• Revenue: USD 96.43 billion (+14%)
• Net income: USD 28.20 billion (+19%)
• Earnings per share (EPS): USD 2.31 (+22%)
• Costs and expenses: USD 65.16 billion (+14%)
• Operating income: USD 31.27 billion (+14%)
• Operating margin: 32.4% (+40 basis points)

Revenue by segment:

• Google Services: 82.5 billion USD (+12%)
• Google Search & other: 54.19 billion USD (+11%)
• Google Search & other: 54.19 billion USD (+11%)
• YouTube ads: 9.79 billion USD (+13%)
• Google Network: 7.35 billion USD (-1%)
• Google subscriptions, platforms, and devices: 11.20 billion USD (+20%)

• Other Bets: 0.37 billion USD (+2%)

Alphabet Inc. (GOOGL) delivered strong Q2 2025 results, surpassing market expectations. Growth was fuelled by the rapid expansion of AI‑related initiatives and robust demand for cloud solutions. However, the report also highlighted several challenges that weighed on investor sentiment and the short‑term outlook for the stock.

Alphabet’s revenue reached approximately USD 96.4 billion, up 14% year-on-year. EPS came in at USD 2.31, exceeding both last year’s result (+22%) and the consensus estimate of USD 2.14. These figures point to strong operating efficiency.

AI technologies and related products were the primary growth drivers:

• Google’s Search business delivered more than 11% growth in advertising revenue
• YouTube ad revenue rose by approximately 13%
• Google Cloud posted an outstanding 32% increase in revenue

Additional growth catalysts included AI‑powered products, such as AI Overviews, AI Mode, and the Gemini chatbot, all of which are increasingly integrated into the Google ecosystem. According to company data, over 2 billion users per month use AI Overviews, AI Mode has reached 100 million users in the US and India, and Gemini now has 450 million active users.

In its forward guidance, Alphabet announced an increase in capital expenditure for 2025 from USD 75 billion to USD 85 billion. The funds are earmarked for expanding data centres, developing cloud infrastructure and scaling AI platforms – underscoring Alphabet’s strategic focus on gaining AI leadership.

Despite the strong results, several weaknesses emerged in the report:

• The sharp rise in capital expenditure raised concerns over investment returns
• Operating losses in the Other Bets segment reached USD 1.25 billion, widening from the previous year
• Questions persist about the viability of investments in areas such as Waymo
• Regulatory risks have intensified, particularly with ongoing antitrust litigation in the US

Following the earnings release, Alphabet shares opened 3.4% higher but gave up nearly all gains by the close. The increase in capital spending and continued losses from non-core projects led investors to question the sustainability of current growth rates and capital efficiency. Lingering regulatory risks further pressured sentiment, ultimately offsetting the initial optimism.

As of the report date, Alphabet’s market capitalisation stands at approximately USD 2.13 trillion. The price-to-earnings (P/E) ratio is around 20, with annual EPS at USD 9.39. This suggests the shares are not significantly overvalued, but nor do they appear deeply undervalued.

Alphabet continues to demonstrate the resilience of its business model and is expanding its footprint in the AI and cloud segments. However, rising capital expenditure and legal headwinds warrant a more cautious approach to investing in the company’s shares.

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Expert forecasts for Alphabet Inc. stock

• Barchart: 41 out of 53 analysts rated Alphabet shares as a Strong Buy, four as a Moderate Buy, and eight as Hold. The highest target price is 250 USD, while the lowest is 160 USD
• MarketBeat: 22 out of 31 experts gave the stock a Buy rating, six recommended Hold, and three suggested Sell. The maximum target price is 245 USD, with the lowest at 171 USD
• TipRanks: 14 out of 15 analysts rated the stock as Buy, and one issued a Hold recommendation. The highest target price is 245 USD, and the lowest is 185 USD
• Stock Analysis: 15 out of 41 experts rated the shares as a Strong Buy, 17 as a Buy, and nine as a Hold. The highest target price is 240 USD, and the lowest is 180 USD

Alphabet Inc. stock price forecast for 2025

On the weekly time frame, Alphabet shares are trading within an upward channel. The quarterly report catalysed further growth, as the GOOG share price broke through resistance at 190 USD. Based on the current trend, this section outlines the potential stock performance for Alphabet Inc. in 2025.

The primary forecast for Alphabet shares anticipates a test of resistance at 207 USD, which corresponds to the historical high. A breakout above this level could trigger a continued rally towards the upper boundary of the ascending channel, around 230 USD.

Conversely, if the support at 188 USD is breached, GOOG shares could decline towards the trendline near 160 USD. A rebound from this level would signal the end of the correction and a potential resumption of the upward trend, with a target of returning to the historical high at 207 USD.