Alphabet Just Scored Big With Meta: Is GOOGL Stock Poised for Another Leg Higher?

Core Viewpoint - Meta will pay Alphabet $10 billion over six years for access to Google Cloud's infrastructure, which is expected to positively impact both companies' stock performance [1][2]. Group 1: Deal Overview - Meta will pay Google $10 billion over six years in exchange for access to Google Cloud's storage, server, and networking services [4]. - This deal highlights Meta's increasing demand for cloud infrastructure as it aims to strengthen its position in the AI sector [5]. Group 2: Impact on Alphabet - The deal is significant for Alphabet, as it earned 74% of its revenue from the digital ad market in the first half of 2025, down from 76% in the same period in 2024 [7]. - Google Cloud accounted for 14% of Alphabet's revenue in the first two quarters of 2025, an increase from 12% year-over-year [8]. - Google Cloud generated over $49 billion in revenue over the trailing 12 months, indicating that the $10 billion from Meta will be a relatively small addition to its business [9]. Group 3: Investor Perspective - Alphabet's stock has outperformed the S&P 500 over the past year, and the Meta deal could enhance investor sentiment due to Alphabet's low price-to-earnings (P/E) ratio of 22, the lowest among the "Magnificent Seven" stocks [11]. - If the Meta deal encourages other companies to engage with Google Cloud, it could improve its market share and subsequently benefit Alphabet's stock [13]. Group 4: Overall Significance - While the $10 billion deal is substantial, it is not expected to be a game-changer for Google Cloud, which generated $49 billion in the last 12 months [15]. - The partnership is notable as it represents collaboration between two major competitors in the digital advertising market, potentially making Google Cloud more appealing to future customers [14][15].