Alphabet’s solid earnings have investors feeling more confident in Google again.
The company posted earnings of $2.31 per share on revenue of $96.43 billion, both ahead of Wall Street analysts' forecast.
Search brought in $54.19 billion, while total ad revenue climbed to $71.34 billion, up 10% from last year. YouTube ads came in at $9.8 billion, slightly above expectations.
Cloud was a standout, with revenue jumping 32% to $13.62 billion. Alphabet recently struck a deal with OpenAI to power ChatGPT using Google Cloud.
Alphabet also raised its 2025 capital spending forecast to $85 billion, up from $75 billion in February, citing “strong and growing demand for our Cloud products and services.” CFO Anat Ashkenazi said spending will likely increase again in 2026.
The upbeat report helped push Alphabet stock (GOOGL) closer to its all-time high. Shares closed at $194.08 on July 25, up more than 13% over the past month. That mirrors a broader bounce in tech stocks as optimism grows around AI and cloud.
So far this year, however, Alphabet shares are still trailing the market, up just 1.91% compared to the S&P 500’s 8.62% gain.
Analysts raise Alphabet's stock price targets
Alphabet’s latest earnings beat has prompted a wave of price target hikes from Wall Street analysts, though opinions split on how much upside is left.
Bank of America analyst Justin Post raised his price target on Alphabet to $217 from $210 while maintaining a buy rating, following the company’s better-than-expected second-quarter results.
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The analyst highlighted that both Cloud and Search outperformed expectations, calling them “a bright spot” in what he described as “another strong” quarter that suggests AI use is growing the market.
“Another stable qtr for Search results increases our confidence in the AI transition and should ease concerns on a potential revenue reset,” the analyst wrote.
“We acknowledge growing users of OpenAI but think Street could be underappreciating potential AI driven upside for Search (more use, better ads) and Cloud,” he added.
JPMorgan raised its price target on Alphabet to $232 from $200 and reiterated an overweight rating, according to thefly.com.
The firm believes Alphabet's AI-driven demand and accelerating backlog make Google Cloud a “bigger driver of the bull case going forward.”
Other firms also lifted their targets following the earnings beat, though with a more cautious tone.
Stifel raised its price target on Alphabet to $222 from $218, citing solid performance across Search, YouTube, and Cloud. However, the firm doesn't expect much follow-through in shares due to lingering concerns about Alphabet’s long-term AI position and the DOJ overhang.
UBS bumped its target to $202 from $192, calling the quarter Alphabet’s “cleanest” in a while, with strong fundamentals supporting earnings growth.
Still, the firm kept a neutral rating, pointing to pressure on the stock’s valuation from unresolved regulatory risks and rising competition in Search.
Google still faces pressure
Despite Alphabet’s strong earnings, concerns around regulatory and competitive threats still exist.
The company is currently facing a major antitrust lawsuit from the U.S. Department of Justice. In early August 2024, Judge Amit Mehta of the U.S. District Court for the District of Columbia accused Google of illegally maintaining a search engine monopoly by using exclusive agreements with device makers like Apple (AAPL) .
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The DOJ is now pursuing remedies that include forced divestitures of Chrome and Android.
The case is still pending, but could lead to structural changes or costly settlements if the DOJ prevails. Mehta said he aims to rule by August, Reuters reported.
Beyond regulatory headwinds, Alphabet is also under mounting pressure from emerging AI competitors.
More Wall Street Analysts:
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- Microsoft analysts reboot stock price targets ahead of Q4 earnings
As generative AI reshapes how users find information, traditional search is being challenged by AI tools like ChatGPT. These platforms offer more conversational responses, potentially reducing the need for users to “Google.”
There’s also a risk that trade tensions could curb advertiser spending on Google’s platforms, potentially impacting revenue growth. But when asked about the outlook, Alphabet’s Chief Business Officer Philipp Schindler said it was too soon to make any calls.
“I think it’s really too early to comment on anything happening in the second half of the year,” Schindler said.
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