Should You Buy, Sell or Hold Alphabet Stock Before Q1 Earnings?

Core Viewpoint - Alphabet is expected to report first-quarter 2025 results on April 24, with earnings estimated at $2.01 per share, reflecting a 6.35% year-over-year growth, and revenues projected at $75.53 billion, indicating a significant growth of 111.75% from the previous year [1][2]. Group 1: Earnings and Revenue Expectations - The Zacks Consensus Estimate for Alphabet's earnings is $2.01 per share, which is a slight decrease of one cent over the past month [1]. - The anticipated revenue for the fourth quarter is $75.53 billion, showing a remarkable growth of 111.75% compared to the same quarter last year [1]. Group 2: Business Performance and Growth Drivers - Alphabet's upcoming quarterly results are expected to benefit from strong momentum in its search and cloud businesses, particularly due to advancements in Generative AI capabilities [2]. - The integration of Generative AI technology into Google Search is enhancing search results, with features like Circle to Search gaining popularity among users [3]. - Google Cloud has established itself as the third-largest provider in the cloud infrastructure market, driven by the adoption of Google Cloud Platform and Google Workspace [4]. Group 3: Challenges and Market Position - Alphabet is facing challenges due to a lack of capacity in its cloud segment, which is expected to lead to increased variability in cloud revenues until new capacity comes online in 2025 [5]. - Alphabet's shares have declined by 22.1% year-to-date, although this performance is better than the Zacks Internet Services industry and the Zacks Computer & Technology sector, which dropped by 18.6% and 17.2%, respectively [6]. Group 4: Valuation and Technical Analysis - GOOGL shares are currently considered overvalued, trading at a forward Price/Sales ratio of 5.27X compared to the industry average of 4.47X [9]. - The stock is exhibiting a bearish trend, trading below both the 50-day and 200-day moving averages [12]. Group 5: Strategic Initiatives - Alphabet's initiatives to deploy AI and the upcoming combination with Wiz are expected to enhance its competitive position in the cloud market, particularly in security offerings [15]. - The collaboration with Oracle aims to expand service availability and meet rising customer demand, with plans to extend to 11 new regions over the next year [17].