Alphabet Up 5% on Good Q1 Results — What’s Left to Buy?
In our last Finbite Insights post, we highlighted Alphabet as one of the buyable names in the “Magnificent 7.” This week, it delivered. Alphabet (Google) posted a solid Q1 2025 earnings report, sending its stock up 5% after-hours.
Revenue came in at $90.2 billion, up 12% year-on-year, with EPS at $2.81 — well above Wall Street expectations of $89.2 billion and $2.01. The clear standout? Google Cloud, which surged 28% to $12.3 billion in revenue, silencing fears of an AI slowdown. Management doubled down, committing $75 billion in capital expenditure this year — much of it aimed at expanding Google Cloud’s capacity. Operating profit for the division more than doubled year-on-year, proving that scale and past investments are starting to pay off.
It wasn’t just Cloud. Other segments across Alphabet’s business also held up well, growing roughly in line with historical trends. Shareholders got another bonus: a massive $70 billion stock buyback, signaling confidence that the stock remains a good value.
AI Search and Antitrust: Still There, But Less Scary
Two major concerns have weighed on Alphabet’s valuation: AI competition and antitrust cases.
Since the rise of ChatGPT, Google’s global search share has slipped slightly — from around 93% to 89.6%. But Google hasn’t been idle. In Q1, CEO Sundar Pichai announced the rollout of Gemini 2.5, its most advanced AI model yet. Google has now integrated AI-powered summaries (“Overviews”) into Search, reaching 1.5 billion users a month. In short: the company is not just defending its turf — it’s upgrading it.
And with $100 billion in cash sitting in its war chest, Alphabet has all the firepower it needs to keep pushing innovation while absorbing any turbulence.
As for the antitrust risks, they're real but overblown. Any final ruling in the major search case likely won’t land until 2026 or later. Even then, analysts think the harshest remedies (like splitting off Chrome or changing search contracts) won’t survive the appeals process. And if Google is forced to divest something like Chrome or its ad stack, those assets are valuable on their own — not business killers.
Bottom line: the existential risk some feared looks overstated. With massive cash reserves and ongoing buybacks, there’s a solid floor under Alphabet’s stock.
We previously estimated Alphabet’s fair value at $163. After this week’s 5% jump, it’s now trading around $167 —still reasonably priced but no longer a bargain. Investors looking for fresh ideas might want to shift their gaze to the next opportunity…