Yahoo Finance·2025-10-30 17:33Core Insights - Alphabet's stock increased by 5% following a strong earnings report, surpassing analysts' expectations with earnings of $2.87 per share and sales of $102.4 billion, compared to forecasts of $2.26 per share and $100.1 billion in sales [1][3] Financial Performance - Revenue for Alphabet grew by 16% year over year, with Google Cloud sales increasing by 34%, contributing significantly to overall growth [3] - Other services revenue rose by 14%, with search revenue climbing 15% and YouTube ads revenue growing 16% [3] - Operating margins improved, leading to a 35% increase in earnings per share [3] Management Commentary - CEO Sundar Pichai highlighted the quarter's success, noting double-digit growth across all major business segments and marking the first-ever $100 billion quarter for the company [4] Investment Considerations - Despite strong revenue growth, concerns arise from Alphabet's high capital expenditures, which increased by 85% to support its AI initiatives, leading to a free cash flow of only $48.7 billion, slightly above last year's $48 billion [5][6] - The price-to-free cash flow ratio for Alphabet is nearly 54, which may be considered too high given the current financial metrics [6] Analyst Recommendations - Analysts suggest caution before investing in Alphabet, noting the high costs associated with AI investments despite revenue growth [7] - Alphabet was not included in a list of top stock recommendations by The Motley Fool Stock Advisor, which identified ten other stocks with potentially higher returns [8]