Buy, Sell or Hold Alphabet Stock? Key Tips Ahead of Q2 Earnings

Core Insights - Alphabet (GOOGL) is expected to report second-quarter 2025 results on July 23, with earnings estimated at $2.13 per share, reflecting a 12.7% year-over-year growth, and revenues projected at $79.22 billion, indicating an 11.02% increase from the previous year [1][8]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for second-quarter 2025 Search and other revenues is pegged at $52.36 billion, indicating an 8% growth over the figure reported in the year-ago quarter [4]. - The consensus mark for second-quarter 2025 Google Cloud revenues is pegged at $13.04 billion, indicating a 26% growth over the figure reported in the year-ago quarter [6]. Group 2: Business Performance and Growth Drivers - Alphabet has a strong earnings surprise history, with GOOGL's earnings surpassing the Zacks Consensus Estimate in the last four quarters, averaging a surprise of 14.64% [2]. - The integration of Generative AI technology into Google Search, particularly the AI-powered Circle to Search, is driving additional search activity and gaining popularity among younger users [3]. - Google Cloud is rapidly growing and has solidified its position as the third-largest provider in the cloud infrastructure market, with a market share of 22% as of Q1 2025 [5][6]. Group 3: Market Position and Competitive Landscape - Google Cloud's growth is supported by partnerships, including a significant collaboration with NVIDIA, enhancing its competitive position against Amazon and Microsoft [17]. - Recent deals with Ecobank and BBVA are expected to expand Google Cloud's footprint, particularly in underpenetrated regions like Africa, presenting significant growth opportunities [18]. Group 4: Stock Performance and Valuation - GOOGL shares have declined 3.1% year-to-date, underperforming the Zacks Internet Services industry and the Zacks Computer & Technology sector [10]. - GOOGL is currently trading at a forward Price/Sales ratio of 6.43X, which is higher than the industry average of 5.49X, indicating a potentially overvalued stock [11].