Alphabet(US:GOOG) Benzinga·2025-07-25 16:50Core Insights - Goldman Sachs analyst Eric Sheridan maintained a Buy rating on Alphabet GOOGL with a price target of $234, citing strong Q2 2025 results and solid momentum in core businesses such as Search, YouTube, and Cloud [1] - The company is aggressively pushing into AI, addressing investor concerns regarding rising capital expenditures and long-term competitiveness in the AI sector [1][5] Financial Performance - Alphabet's updated capital expenditure forecast for 2025 was raised to $85 billion, a 13% increase from prior guidance, with two-thirds allocated to servers and the remainder to data centers [3] - Q3 FY2025 revenue is expected to be $99.69 billion, with GAAP EBITDA of $38.47 billion and GAAP EPS of $2.24; full-year 2025 estimates were increased to $393.87 billion in revenue, $150.97 billion in EBITDA, and $9.75 in EPS [7] AI Strategy and Developments - The increasing usage of Gemini, AI agents, and multimodal search exemplifies Alphabet's evolving AI strategy, with confidence in transforming Search through a multi-surface AI approach [4] - Despite negative sentiment around the AI transition, the integration of AI across products and infrastructure positions the company well for future growth [5] Revenue Growth and Segments - Search & Other revenue rose 11.7% year-over-year, with paid clicks growing 4%, driven by AI features that enhance engagement [10] - YouTube ad revenue increased by 13%, and the broader Subscriptions, Platforms & Devices segment rose 20%, with Shorts averaging 200 billion daily views [10] - Cloud revenue surged 31.7% year-over-year, with operating margins expanding from 11.3% to 20.7%, benefiting from enterprise adoption of generative AI [10] Upcoming Events - Two near-term events that could influence the company's trajectory include the expected ruling in the U.S. search antitrust case by late August and the August 20 Pixel launch event, which may showcase deeper AI integration in hardware [6]