Yahoo Finance·2026-01-05 12:09Core Insights - Alphabet reported a strong quarter with a 16% year-over-year revenue increase, exceeding expectations by $2.2 billion, and an EPS of $2.87, which was 61 cents above forecasts [1][2] Alphabet Performance - In Q3 2025, Google Ads contributed $74.2 billion to Alphabet's total revenue of $102.3 billion, while Google Cloud revenue reached $15.16 billion, growing 33.5% year-over-year due to enterprise AI workloads and infrastructure demand [2] - The third quarter marked Alphabet's first-ever quarter with revenue exceeding $100 billion, driven by AI-powered service enhancements, including AI Overviews and the interactive AI Mode in Google Search [8] - Alphabet's shares surged 65% in 2025, indicating strong market confidence in the company's future prospects [9] Analyst Insights - Doug Anmuth from J.P. Morgan highlighted Alphabet as a top pick, emphasizing its strong position in search-driven digital advertising and AI ambitions, projecting low to mid-teens percentage growth in search revenue [3][10] - Anmuth set a price target of $385 for Alphabet, suggesting a 22% upside from current levels, with a consensus rating of Strong Buy from 27 out of 34 analysts [11] Industry Trends - The AI revolution has significantly impacted digital companies, with productivity improvements and new monetization paths emerging as platforms integrate AI into ads, search, and customer engagement [7] - The overall digital trends and internet sector are expected to continue growing, with major companies projected to achieve low to mid-teens revenue growth in 2026, despite mixed operating income and EPS results [5][6]