Alphabet: After Its Best Quarter in Decades, Is It Time to Buy?

Core Viewpoint - Alphabet Inc. has experienced a significant recovery, posting its strongest quarter in nearly two decades, which has shifted investor sentiment and raised questions about future investment opportunities [2][3]. Financial Performance - In Q2 2025, Alphabet reported a 14% year-over-year revenue increase to $96.43 billion, surpassing estimates of $94 billion [4]. - Earnings per share rose 22% to $2.31, exceeding the consensus estimate of $2.17 [4]. - The company achieved a remarkable 38% gain in Q3 2025, marking its best return since Q2 2005 [3]. Key Growth Drivers - Google Cloud revenue increased by 32% to $13.62 billion, crossing the $50 billion mark in annual recurring revenue [5]. - YouTube's ad revenue grew by 13% to $9.79 billion, solidifying its position as the leading online video platform [6]. - Google Search revenue rose by 11.7%, outperforming analyst expectations of 8%, alleviating concerns about potential disruptions from AI [6]. Regulatory Environment - A favorable U.S. court decision in the Department of Justice's antitrust case against Google has lifted regulatory pressures, contributing to the stock's rally [7]. Valuation Insights - Alphabet's trailing P/E ratio is around 26, slightly below its 10-year average of 28, indicating that while the stock is not cheap, it remains reasonable compared to peers [8]. - Year-to-date, shares have increased by nearly 30%, with continued double-digit revenue growth and strong positions in cloud and AI [9]. Technical Analysis - The stock has found support at the $240 level after a pullback from $255, which is now considered a key technical level [10]. - A breakout above $250 could signal the start of a new upward trend, while a decisive break below $240 may indicate a shift in momentum [11]. Investment Outlook - Alphabet's transformation from a laggard to a leader in the tech sector has been rapid, driven by strong earnings, regulatory relief, and AI momentum [12]. - For long-term investors, pullbacks near $240 may present ideal entry points, while traders should watch for a breakout above $250 for potential momentum [13].