Download PDF

1. Company Snapshot

1.a. Company Description

Alphabet Inc.offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America.It operates through Google Services, Google Cloud, and Other Bets segments.


The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube.It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services.The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers.


The Other Bets segment sells healthcare-related and internet services.The company was incorporated in 1998 and is headquartered in Mountain View, California.

Show Full description

1.b. Last Insights on GOOG

Alphabet's recent performance has been driven by robust Q3 results, showcasing broad-based double-digit revenue growth and strong fundamentals. The company's AI-driven search and cloud momentum have fueled standout gains, supporting its premium valuation. Significant investments in AI and Cloud, along with a growing revenue backlog of $157.7B, position Alphabet for continued diversified growth. Moreover, Google Cloud's operating margin improvement of 590 bps from Q1, driven by scaling AI monetization, has boosted overall earnings growth. Analysts view Alphabet as a buy, citing attractive valuation, robust fundamentals, and long-term growth prospects.

1.c. Company Highlights

2. Alphabet's Q3 2025 Earnings: A Strong Performance Driven by AI

Alphabet's third-quarter 2025 earnings report highlighted a robust financial performance, with revenue reaching $102.3 billion, a 16% year-over-year increase. The company's operating margin stood at 30.5%, with operating income increasing 9% to $31.2 billion. Earnings per share (EPS) came in at $2.87, beating estimates of $2.3, representing a 35% year-over-year increase. Anat Ashkenazi noted that the company's momentum is strong, with AI driving growth across the business. The company's financial performance was characterized by a total cost of revenue of $41.4 billion, up 13%, and total operating expenses increasing 28% to $29.7 billion.

Publication Date: Oct -31

📋 Highlights
  • Revenue Surge:: Alphabet achieved $102.3B in revenue (16% YoY), with Google Services contributing $87B (14% YoY).<br>
  • Cloud Growth Acceleration:: Google Cloud revenue rose 34% to $15.2B, with operating income up 85% to $3.6B and a 23.7% margin.<br>
  • AI-Driven Momentum:: Gemini app reached 650M MAUs, with queries tripling from Q2, while AI Overviews monetized at baseline ad rates.<br>
  • Strong Profitability:: Excluding a $3.5B fine, operating income surged 22% (33.9% margin), and net income hit $35B (33% YoY).<br>
  • Capital Expenditure Expansion:: CapEx forecast revised up to $91–93B in 2025, driven by Cloud demand and AI infrastructure investments.<br>

Segment Performance

Google Services revenues increased 14% to $87.1 billion, driven by strength in Google Search, YouTube advertising, and subscriptions. Google Search and other advertising revenues increased 15% to $56.6 billion, with YouTube advertising revenues up 15% to $10.3 billion. Google Cloud revenue grew 34% to $15.2 billion, driven by strong performance in GCP, which grew at a rate higher than Cloud's overall revenue growth. The Cloud operating income increased 85% to $3.6 billion, with an operating margin of 23.7%.

AI-Driven Growth

The company is witnessing significant growth driven by AI, with Sundar Pichai stating that AI is driving real business results. The Gemini app has over 650 million monthly active users, and queries increased by 3x from Q2. The adoption of AI Overviews and Mode is high, with a core group of passionate users, and the product is resonating strongly with early adopters. Philipp Schindler added that the monetization of AI Overviews is approximately the same rate as the current baseline of ads.

Outlook and Valuation

The company expects a significant increase in CapEx, with a revised estimate of $91-93 billion in 2025. Analysts estimate next year's revenue growth at 12.3%. With a current P/E Ratio of 27.38 and P/S Ratio of 8.83, the market is pricing in a certain level of growth. The company's ROIC is 23.22%, and ROE is 35.0%, indicating a strong return on investments. The EV/EBITDA ratio is 19.88, suggesting a reasonable valuation.

Future Prospects

The company is focused on driving growth in Search, YouTube, and Cloud, with a strong emphasis on AI-driven experiences. The pace of innovation in frontier models is increasing, with Sundar Pichai excited about the Gemini 3.0 release. The company's full-stack AI capabilities will help drive a good trajectory in cloud economics, with a strong momentum in cloud deals. The number of deals over $1 billion signed in the first three quarters of the year has exceeded the previous two years.

3. NewsRoom

Card image cap

NVDA "Rising Tide," AVGO Accelerating Demand, GOOGL & AMZN Power Competition

01:00

Source: youtube.com

Card image cap

Billionaires Are Buying This Stock Like There's No Tomorrow

Dec -04

Source: fool.com

Card image cap

Google executive sees AI search as expansion for web

Dec -04

Source: reuters.com

Card image cap

Alphabet AI Chips Seen as Growth Driver as Gemini 3 Wins Praise

Dec -04

Source: youtube.com

Card image cap

Billionaire Philippe Laffont Is Selling CoreWeave and Buying This Unstoppable Artificial Intelligence (AI) Stock Instead

Dec -04

Source: fool.com

Card image cap

Cue the Bandwagon Investors: Is It Too Late to Follow Warren Buffett Into Alphabet?

Dec -04

Source: 247wallst.com

Card image cap

Prediction: This Will Be the World's Largest Company By Year-End 2026 (Hint: It's Not Nvidia)

Dec -04

Source: fool.com

Card image cap

Alphabet's AI chip business could be worth nearly $1T, analyst says

Dec -04

Source: proactiveinvestors.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.60%)

6. Segments

Google Services

Expected Growth: 9.5%

Although Google Services is a mature segment, its diverse revenue streams and continued innovation in advertising and YouTube will drive growth. The expected growth is slightly lower than the global growth hypothesis due to the segment's maturity, but still substantial due to its dominant market position and expanding YouTube subscriptions.

Other Bets

Expected Growth: 12.0%

Other Bets is a segment with high growth potential due to the innovative nature of its businesses. Waymo's advancements in autonomous driving and potential commercialization could drive significant revenue growth. Verily's life sciences research may also lead to future revenue streams, justifying a higher growth expectation than the global hypothesis.

Google Cloud

Expected Growth: 14.0%

Google Cloud is in a rapidly expanding market with increasing demand for cloud infrastructure and services. The segment's growth is driven by its competitive offerings, expanding customer base, and the overall trend towards cloud adoption. The expected growth is higher than the global hypothesis, reflecting the segment's strong potential.

Unallocated Hedging Gains (Losses)

Expected Growth: 0.0%

Unallocated Hedging Gains (Losses) is not expected to grow as it represents financial hedging activities rather than operational revenue. Its value can fluctuate based on market conditions and hedging strategies, and it is not directly related to the company's core business growth.

7. Detailed Products

Google Search

A search engine that allows users to search the internet for information

Google Ads

A platform that allows businesses to create and display ads on the Google search engine and other websites

YouTube

A video-sharing platform that allows users to upload, share, and view videos

Google Drive

A cloud storage service that allows users to store and access files online

Google Maps

A mapping service that provides directions and location information

Android

A mobile operating system used by many smartphones and tablets

Google Cloud Platform

A suite of cloud computing services that provide infrastructure, data analytics, and machine learning capabilities

Google Home

A smart speaker and virtual assistant that allows users to control their home and access information

Waymo

A self-driving car project that aims to improve road safety and mobility

Verily

A life sciences company that focuses on developing healthcare technologies

CapitalG

A venture capital investment fund that invests in startups and growth-stage companies

Chronicle

A cybersecurity company that provides threat detection and incident response services

X

A research and development company that focuses on moonshot projects

8. Alphabet Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Alphabet Inc. has a low threat of substitutes due to its dominance in the search engine market and its ability to continuously innovate and improve its services.

Bargaining Power Of Customers

Alphabet Inc. has a medium bargaining power of customers due to the availability of alternative search engines and online services, but its strong brand recognition and user loyalty mitigate this threat.

Bargaining Power Of Suppliers

Alphabet Inc. has a low bargaining power of suppliers due to its significant market share and ability to negotiate favorable terms with its suppliers.

Threat Of New Entrants

Alphabet Inc. has a low threat of new entrants due to the significant barriers to entry in the search engine market, including the need for significant investments in technology and infrastructure.

Intensity Of Rivalry

Alphabet Inc. operates in a highly competitive market with intense rivalry from other technology companies, including Microsoft, Amazon, and Facebook, which drives innovation and improvement in its services.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 9.14%
Debt Cost 3.95%
Equity Weight 90.86%
Equity Cost 9.04%
WACC 8.58%
Leverage 10.06%

11. Quality Control: Alphabet Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
AT&T

A-Score: 7.0/10

Value: 7.1

Growth: 2.6

Quality: 5.7

Yield: 9.0

Momentum: 8.5

Volatility: 9.3

1-Year Total Return ->

View Full Report
Stock-Card
Alphabet

A-Score: 5.9/10

Value: 1.8

Growth: 8.3

Quality: 8.4

Yield: 0.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

View Full Report
Stock-Card
Meta

A-Score: 5.3/10

Value: 1.8

Growth: 8.8

Quality: 8.3

Yield: 0.0

Momentum: 7.5

Volatility: 5.7

1-Year Total Return ->

View Full Report
Stock-Card
DoorDash

A-Score: 5.2/10

Value: 0.2

Growth: 9.1

Quality: 6.3

Yield: 0.0

Momentum: 9.5

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Pinterest

A-Score: 4.8/10

Value: 2.8

Growth: 8.6

Quality: 8.8

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
Snap

A-Score: 3.1/10

Value: 5.3

Growth: 6.4

Quality: 3.4

Yield: 0.0

Momentum: 0.5

Volatility: 2.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

318.39$

Current Price

318.39$

Potential

-0.00%

Expected Cash-Flows