To The Moon

$Alphabet(GOOGL)$ is set to release its fiscal Q2 2025 earnings results on Wednesday, 23 July 2025, after the US market closes. The company will also hold its quarterly conference call at 1:30 PM Pacific Time (4:30 PM Eastern Time) on the same day.

Revenue: Analysts generally project Q2 2025 revenue to be around $79.22 billion to $93.8 billion, representing year-over-year growth in the range of 10.7% to 11.02%. It's worth noting there's a range in reported consensus figures, so checking multiple sources closer to the date for the most up-to-date consensus is advisable.

Earnings Per Share (EPS): The Zacks Consensus Estimate for EPS is approximately $2.13 to $2.16 per share, which would indicate a year-over-year increase of roughly 12.7% to 13.2%. However, some analysts project a decline from Q1's $2.81 EPS, reflecting cautious expectations due to increased AI investment costs.

Tipranks has a higher consensus estimate for earnings per share (EPS at $2.18.

Alphabet (GOOGL) Fiscal Q1 2025 Earnings Summary

Alphabet reported strong financial results for the first quarter of fiscal year 2025, demonstrating healthy growth and momentum across its businesses.

Key Financial Highlights for Q1 2025:

Consolidated Revenues: Increased 12% year-over-year (14% in constant currency) to $90.2 billion.

Operating Income: Grew by 20%, with the operating margin expanding by 2 percentage points to 34%.

Net Income: Saw a significant increase of 46%, reaching $34.54 billion.

Diluted Earnings Per Share (EPS): Rose 49% to $2.81.

Dividend: The company announced a 5% increase to its quarterly cash dividend, resulting in a dividend of $0.21 per share.

Revenue by Segment:

Google Services: Increased 10% to $77.3 billion, driven by strong performance in Google Search & other, Google subscriptions, platforms, and devices, and YouTube ads.

Google advertising revenue was $66.9 billion (+8%), with Google Search & other at $50.7 billion (+10%) and YouTube ads at $8.9 billion (+10%).

Google subscriptions, platforms, and devices revenue increased 19% to $10.4 billion.

Google Cloud: Revenues surged 28% to $12.3 billion, primarily driven by growth in Google Cloud Platform (GCP) across core GCP products, AI Infrastructure, and Generative AI Solutions. Google Cloud's operating income for the quarter was $2.177 billion.

Other Bets: Revenues were $450 million.

Management Commentary and Future Outlook:

CEO Sundar Pichai expressed satisfaction with the strong Q1 results, highlighting the robust growth and momentum across the business, particularly underpinned by Alphabet's "full stack approach to AI." Key points from management and the outlook include:

AI Innovation: A central driver of growth, with the rollout of Gemini 2.5, Google's most intelligent AI model, achieving performance breakthroughs. AI Overviews in Search are seeing strong engagement with over 1.5 billion monthly users.

Subscriptions Growth: Surpassed 270 million paid subscriptions, largely driven by YouTube and Google One.

Google Cloud Leadership: Continued rapid growth with significant demand for solutions, reinforcing the company's strategic focus on AI infrastructure.

Capital Expenditures: Q1 2025 capital expenditures of $17.2 billion are in line with the full-year plan, indicating continued investment in infrastructure, likely for AI development.

Market Sentiment: Analysts maintain an optimistic outlook on Alphabet stock, with a majority rating it as a "Strong Buy" or "Buy," and average price targets well above current valuations.

GOOGL Fiscal Q2 2025 Earnings: Key Metrics to Watch

Here is what investors are laser-focused on ahead of Alphabet’s July 22 earnings release:

Core Financial Metrics

• EPS Forecast: $2.16–$2.17, up ~14% YoY

• Revenue Estimate: $93.67B, +10.5% YoY

• Net Income: ~$24.7B, up from $21.2B YoY

• Free Cash Flow Margin: ~20.8% (watch for compression due to AI capex)

Segment-Level Drivers

• Google Services: Search, YouTube, Android, and Play Store—expected to drive >75% of revenue

• Google Cloud: Forecasted at $13.04B, +26% YoY

• YouTube Ads: ~$9.47B, +9.3% YoY

• AI Overviews & Gemini: Monetization progress and user growth (1.5B+ monthly users)

Risk Factors

• Traffic Acquisition Costs (TAC): Estimated at $14.07B, up from $13.39B YoY

• Regulatory Overhang: Antitrust cases and EU/US scrutiny

• Valuation Sensitivity: P/FCF at 32.05 vs 5Y avg of 26.25—potential de-rating risk

Here is an analysis of upcoming Alphabet (GOOGL) fiscal Q2 2025 earnings:

Analyst Expectations (Consensus Estimates):

Operating Margin: Expected to improve from the previous year's 32.4% to around 34.1%.

Segment Performance Expectations:

Google Search & other revenues: Expected to be around $52.36 billion, indicating approximately 8% growth year-over-year.

Google Cloud revenues: Projected to reach $13.04 billion, showing robust 26% year-over-year growth, driven by strong demand for GCP and AI solutions.

YouTube ads revenues: Forecasted to be around $9.47 billion, an increase of about 9.3% from the prior year.

Google Network revenue: Expected to see a slight decline of about 4% year-over-year to $7.15 billion.

Key Factors to Watch:

AI Investments and Monetization:

Impact of Gemini and AI Overviews: Investors will closely monitor how Google's continued integration of generative AI (GenAI) into Search, particularly AI Overviews (which reached 1.5 billion monthly users in Q1), impacts user engagement and, crucially, advertising revenue. The delicate balance between enhancing user experience with AI and potentially cannibalizing traditional search ad clicks is a key concern.

AI Infrastructure Costs: The significant capital expenditures for AI development and infrastructure (Alphabet plans to invest around $75 billion in 2025) will continue to be a factor in profitability. Analysts are factoring in increased AI investment costs which could temper Q2 EPS growth compared to Q1.

Google Cloud Growth and Profitability:

Google Cloud is a major growth driver, consistently gaining market share against competitors like AWS and Microsoft Azure. Its ability to effectively combine AI capabilities with robust infrastructure will be crucial.

While growth is strong, some reports suggest a potential lack of capacity in Google Cloud until new infrastructure comes online in 2025, which could introduce some variability or constraint to cloud revenue growth in the near term. Investors will be looking for updates on this.

Advertising Market Trends:

Despite overall market headwinds, the Google Services segment, particularly Search and YouTube ads, is expected to show continued resilience. The broader digital advertising market health will play a significant role.

YouTube's performance, especially with subscriptions (which saw strong growth in Q1), will also be under scrutiny.

Regulatory Headwinds and Antitrust Scrutiny:

Alphabet continues to face significant antitrust challenges globally, particularly concerning its dominance in search and online advertising. Any updates or commentary regarding ongoing legal battles and potential remedies (like the divestiture of Chrome) could impact investor sentiment and future business models.

Share Buyback and Dividend Program:

Following the dividend increase and substantial share buyback announced in Q1, investors will be looking for confirmation of continued shareholder returns and any updates on these programs.

Alphabet (GOOGL) Price Target

Based on 38 Wall Street analysts offering 12 month price targets for Alphabet Class A in the last 3 months. The average price target is $203.34 with a high forecast of $250.00 and a low forecast of $160.00. The average price target represents a 9.88% change from the last price of $185.06.

Technical Analysis - Exponential Moving Average (EMA)

While specific numerical guidance for future quarters was not explicitly stated in the provided information, the focus remains on leveraging AI for continued growth across all major segments, with a strong emphasis on the Cloud business and managing expenses.

As we can see from the recent performance from GOOGL, there is strong positive momentum and the bulls are in control, but we can see that the bulls are trying to cut through the resistance range from about 184 to 190.

So it is clear that he bulls are in control but if we are looking for an expansion into the resistance range. In the event of a pull back, and break 181, we are going to lose the uptrend, this could open up a daily downtrend.

So this is how I might want to trade GOOGL, in the event that we get rejected from here and pull back, I will be looking to sell some options at the bottom end of 170 range. Google still representing one of the stocks with the best risk-to-reward profile of all of big tech.

I would say that it is still trading at a very cheap price compared to its sector peers.

Summary

While Q1 2025 was very strong, analysts generally anticipate a moderation in growth for Q2. Sentiment remains largely positive, with many analysts maintaining "buy" or "strong buy" ratings, highlighting confidence in Alphabet's fundamentals and long-term growth driven by AI and cloud computing. However, competitive pressures in AI, a stretched valuation, and ongoing regulatory risks are areas of caution for investors.

The upcoming earnings call will be critical for investors to gain clarity on management's outlook, particularly regarding the trade-offs between AI investments and profitability, and strategies for navigating competitive and regulatory landscapes.

Appreciate if you could share your thoughts in the comment section whether you think GOOGL would be able to provide an earnings surprise from the long-term growth driven by AI and cloud computing. .

@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.