$Alphabet(GOOGL)$ is scheduled to announce its financial results for the first quarter (Q1) of fiscal year 2025 on 24 April 2025 after the market close.
The consensus estimates for revenue are around $75.53 billion, representing an increase of approximately 11.8% year-over-year. Do note that the figure presented likely excludes Traffic Acquisition Costs - TAC.
The consensus estimates for Segment Performance :
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Google Advertising: ~$66.34 billion (+7.6% YoY)
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Google Search & other: ~$50.29 billion (+9.0% YoY)
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YouTube ads: ~$8.91 billion (+10.1% YoY)
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Google Network: ~$7.11 billion (-4.2% YoY)
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Google Cloud: ~$12.18 - $12.3 billion (+27.2% to 30% YoY)
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Traffic Acquisition Costs (TAC): Expected around $13.59 billion (up from $12.95 billion YoY).
The consensus for the earnings per share (EPS) is around $2.01 - $2.06 per share, indicating roughly 6.4% - 7.4% growth year-over-year.
The consensus estimate for EPS from tipranks is at $2.01 which represent a 6.4% increase from the same period last year.
Alphabet (GOOGL) Last Positive Earnings Call Saw Its Share Price Declined By 26.67%
Alphabet had a positive earnings call on 04 Feb 2025 which saw its share price declined by 26.67%.
The earnings call presented a strong performance in revenue growth, particularly in cloud and AI advancements, alongside challenges in network advertising and cloud capacity constraints. The outlook for 2025 includes potential revenue headwinds due to currency fluctuations and leap year effects.
Alphabet (GOOGL) Guidance
During the Alphabet earnings call for the fourth quarter of fiscal year 2024, significant guidance and metrics were discussed across various segments. Sundar Pichai highlighted the company's robust growth, driven primarily by advancements in AI, with AI overviews now available in over 100 countries and contributing to increased user satisfaction in Search. Alphabet achieved a combined annual revenue run rate of $110 billion for Cloud and YouTube, exceeding their initial target of $100 billion. Google Cloud revenues grew by 30% year-over-year, reaching $12 billion in Q4, while YouTube advertising revenue increased by 14% to $10.5 billion. The company also experienced a notable uptick in its AI-powered platforms, with Vertex AI seeing a 5x increase in customers and a 20x increase in usage over the year.
Overall, Alphabet's total revenue for 2024 grew by 14%, reaching $350 billion, with a significant contribution from Google Services, which posted $84 billion in Q4 alone. The company plans to invest approximately $75 billion in capital expenditures in 2025 to support continued growth, particularly in technical infrastructure and AI initiatives.
Key Factors and Themes to Watch For Alphabet (GOOGL) Fiscal Q1 2025
Alphabet's revenue for 2024 reached $350 billion, up 14% on a reported basis and 15% in constant currency versus 2023. Google Services revenues were $84 billion for the quarter, up 10%, with YouTube advertising revenues increasing 14% to $10.5 billion.
Network advertising revenue of $8 billion was down 4% year-over-year. Exited 2024 with more demand than available cloud capacity, indicating a tight supply-demand situation. Expecting a revenue headwind in Q1 2025 from foreign exchange rates and having one less day due to leap year. 2025 expected to be impacted by lapping the strength experienced in the financial service vertical throughout 2024.
Advertising Growth: Performance in core Search and YouTube advertising remains crucial. Continued growth is expected, although the Google Network component (ads on third-party sites) is anticipated to decline. Google Search & YouTube: Dominance in search advertising and YouTube’s monetization of Shorts (vs. TikTok/Instagram Reels) will remain key. Macroeconomic conditions (e.g., consumer spending, ad budgets) will influence performance.
Retail Media & Performance Ads: Growth in e-commerce-related ads (partnering with retailers) and AI-optimized campaigns could offset slower traditional ad markets.
Cloud Momentum and Profitability: Google Cloud is expected to maintain strong double-digit revenue growth. Analysts are also watching Cloud's operating profit margin, with consensus expecting further improvement (around 15.4%), though the range of estimates is wide.
Google Cloud revenue increased by 30% to $12 billion in the fourth quarter, reflecting growth in GCP across core GCP products, AI infrastructure, and generative AI solutions.
Google Cloud (now profitable) must sustain its ~25%+ YoY growth by leveraging AI/ML services (e.g., Vertex AI) and hybrid cloud solutions. Margins will depend on scaling efficiency and enterprise adoption. Competition with AWS and Azure in AI cloud services will intensify.
AI Investment & Capital Expenditures (CapEx): Following the announcement of a significantly increased 2025 CapEx budget (~$75 billion, up over 40% from 2024) primarily for AI infrastructure, investors will be keen for updates on AI product integration (Gemini, Search features), user engagement benefits, and any signs of AI contributing to revenue growth to justify the massive spending. Alphabet’s success in monetizing generative AI (e.g., Gemini, AI-powered Search, Workspace enhancements, and YouTube tools) will be critical. If AI-driven ad formats or cloud services gain traction, they could boost revenue and margins.
Competition with Microsoft (Copilot) and OpenAI in AI infrastructure and enterprise adoption will shape growth. Introduction of Gemini 2.0, significant progress in AI models, and development of new cloud regions and data centers.
Cost Management & Efficiency: While Alphabet has undertaken cost-saving measures, including layoffs, the large CapEx increase puts a focus back on overall spending discipline and operating margins outside of the Cloud segment. Headcount is expected to be relatively stable compared to the previous year. Free cash flow of $24.8 billion in the fourth quarter and $72.8 billion for the full year 2024.
Stock Performance: The stock fell notably after the last earnings report and experienced a decline in Q1 2025. The market reaction to this report will be closely watched.
Regulatory and Legal Risks
Ongoing antitrust cases (e.g., DOJ lawsuit over search dominance, ad-tech lawsuits in the EU) could lead to fines or operational constraints. Regulatory scrutiny around AI ethics and data privacy may also escalate costs.
Other Bets and Moonshots
Progress in Waymo (autonomous vehicles) and Verily (healthtech) could signal long-term optionality, but these segments are likely to remain cash-intensive and not yet material to earnings.
Macro Environment
Interest rates, inflation, and global GDP trends will impact ad spending and cloud adoption. A recessionary environment could pressure growth, while a soft landing would support it.
Alphabet (GOOGL) Price Target
Based on 37 Wall Street analysts offering 12 month price targets for Alphabet Class A in the last 3 months. The average price target is $197.45 with a high forecast of $226.00 and a low forecast of $159.00. The average price target represents a 30.62% change from the last price of $151.16.
Alphabet’s performance will hinge on: Execution in AI (catching up to Microsoft/OpenAI), Avoiding major regulatory penalties and Sustaining dominance in search amid AI disruption (e.g., ChatGPT-style answers reducing ad clicks).
With the trade war on-going between US-China and EU, there might be a challenge for Alphabet to expand in other regions.
Technical Analysis - Exponential Moving Average (EMA)
If we looked at how Alphabet have been affected by the recent tariff turmoil, it looks like we need to see stronger performance from the AI-driven ad/cloud acceleration, YouTube Shorts monetization surpassing TikTok, and regulatory clarity. This might be able to drive margins in the range of +- 30%.
But if we looked at the macro headwinds caused by the tariffs, we could be seeing Ad slowdown, there could be also cloud growth deceleration, on top of that, there are some pending regulatory fines, and costly AI investments with delayed ROI.
Department of Justice lawsuit allegation this time not the DOJ but from Europe as well Europe has ruled their advertising business to be a monopoly. Last fall we had a uh ruling by the Department of Justice in the US that their search business was a monopoly
Google continuously gets hits by all sides this has make their valuation so cheap, this reflect that Google is heading into an uncertain time for the company. But do consider the solid fundamentals, with great net margins, great cloud revenue growth and a tremendous free cash flow growth.
GOOGL is now below the resistance which is 175 down to about 163 and support which stands at about 149 to 134. So I think GOOGL could be in for the long-term portfolio not for swing trade as there is a loss of structure right daily uptrend, and the uptrend is now lost The bears are trying to go for the daily downtrend and recapture of those lows.
These factor might further make the already weak momentum weaker as seen in RSI, and the bears remains in control, so we really need to see a tariffs reversal, for Alphabet ad earnings to at least have a better guidance for 2025.
Summary
Analysts expect Alphabet to report another quarter of solid year-over-year growth in both revenue and earnings for Q1 2025, primarily driven by continued strength in Search, YouTube, and especially Google Cloud.
However, the focus will be intense on the costs associated with AI development (reflected in the massive CapEx budget), the path to AI monetization, and the sustainability of Cloud profitability improvements. Any commentary on advertising trends and overall cost control will also be critical when the company reports on 24 April.
The current analyst consensus rating leans towards "Hold" (e.g., Zacks Rank #3), suggesting expectations are for performance in line with the broader market in the near term, despite positive long-term growth forecasts.
Appreciate if you could share your thoughts in the comment section whether you think Alphabet could provide a better guidance on cost control and path to AI monetization.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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