TLDR
- Alphabet stock closed at $161.47, up 2.38% after beating Q1 2025 earnings expectations.
- EPS came in at $2.81 on $90.2 billion in revenue, both topping estimates.
- A 5% dividend increase and $70 billion buyback lifted investor sentiment.
- Cloud revenue grew 28% to $12.3 billion, driven by AI and data center demand.
- Ongoing antitrust cases pose long-term risks to Google’s business model.
Alphabet Inc. (NASDAQ: GOOG) shares jumped 2.38% to $161.47 after the tech giant reported stronger-than-expected Q1 2025 results. The company posted earnings per share of $2.81, beating the consensus estimate of $2.01. Revenue surged to $90.2 billion, up from $80.5 billion a year ago and ahead of analyst expectations of $89.1 billion.
The company declared a 5% increase in its quarterly dividend and authorized a $70 billion stock repurchase plan. This signals confidence in future cash flows and shareholder returns amid legal scrutiny and macroeconomic uncertainty.
Cloud and AI Power Revenue Growth
Alphabet’s cloud division remained a major growth driver, reporting $12.3 billion in revenue—a 28% year-over-year increase. CEO Sundar Pichai emphasized the company’s “full stack approach to AI” and praised Gemini software for fueling innovation across verticals.
Alphabet’s advertising business also delivered strong results, bringing in $66.8 billion versus the $66.4 billion expected. These core segments helped the company achieve a net profit of $34.5 billion, marking a strong start to the fiscal year.
Legal Headwinds Remain Significant
Despite the upbeat earnings, Alphabet continues to face regulatory pressure. A federal judge recently ruled that Google holds an illegal monopoly in digital advertising. The Department of Justice is pushing for remedies that could include the sale of key assets such as Chrome or YouTube Ads.
This is the second major antitrust ruling against Alphabet, and more regulatory actions are expected. The potential restructuring or breakup of its advertising empire could pose a long-term threat to the company’s dominance.
Mixed Market Performance
Alphabet stock is still down 15.12% year-to-date, underperforming the S&P 500’s 6.75% decline. Over the past year, GOOG has gained just 0.7%, far behind the S&P 500’s 8.15%. However, the stock boasts strong long-term performance, with a 5-year return of 153.63%, compared to 93.35% for the index.
The company’s current 1-year price target stands at $205, indicating potential upside if earnings strength continues and regulatory risks are managed effectively.
Outlook
With strong cloud and ad performance, plus aggressive capital return programs, Alphabet appears well-positioned for future growth. However, legal and political challenges remain a cloud over the stock. Investors will be watching closely for Q2 results and updates on the DOJ’s antitrust proceedings.
Despite current macro and legal uncertainty, Alphabet’s execution in cloud and AI signals strength in its core and emerging businesses.
