Alphabet Inc. Faces Challenges Despite Strong Q1 Earnings Report

With a market cap of $1.9 trillion, Alphabet Inc. (GOOGL) operates as a global technology conglomerate. The company includes divisions such as Google Services, Google Cloud, and Other Bets, serving regions that encompass the U.S., Europe, and Asia-Pacific. Originally a leader in search engines with over 94% market share, Alphabet has expanded into cloud computing, video and music streaming, autonomous vehicles via Waymo, and healthcare innovations through Verily.

Over the past 52 weeks, shares of the Mountain View, California-based company have struggled compared to the broader market. GOOGL has declined 2.5%, while the S&P 500 Index ($SPX) has seen a 10.6% rally. On a year-to-date basis, Alphabet shares are down 16.1%, compared to a 5.3% drop for the S&P 500.

Alphabet’s Recent Performance

Focusing on Alphabet’s recent performance, the internet search leader has also lagged the Communication Services Select Sector SPDR ETF Fund (XLC), which has grown 22.6% over the past year.

Following a strong Q1 2025 earnings release on April 24, shares of GOOGL rose by 1.7%. The earnings report revealed a significant 49% year-over-year increase in EPS to $2.81, exceeding analyst expectations. Revenue climbed 12% to $90.2 billion, fueled by double-digit growth in Google Search, YouTube ads, subscriptions, and a notable 28% increase in Google Cloud revenue. Investors expressed optimism due to a 5% increase in dividends and a newly authorized $70 billion share repurchase program. Furthermore, the rollout of the advanced AI model, Gemini 2.5, and solid user engagement in AI-powered Search features contributed to the positive sentiment among investors.

Future Forecasts and Analyst Opinions

For the ongoing fiscal year, which ends in December 2025, analysts anticipate that GOOGL’s EPS will grow 17.3% year-over-year to $9.43. The earnings surprises have also been promising, as the company has surpassed consensus estimates in each of the last four quarters.

The consensus rating among the 52 analysts covering the stock is a “Strong Buy”. This assessment is based on 41 “Strong Buy” ratings, three “Moderate Buys,” and eight “Holds.”

This sentiment reflects an improvement from three months ago, when there were only 39 “Strong Buy” ratings.

On April 30, Tigress Financial raised Alphabet’s price target to $240, while retaining a “Strong Buy” rating. The firm highlights Alphabet’s AI innovation and comprehensive development as critical factors bolstering growth in advertising, cloud revenue, and shareholder value.

As of this writing, GOOGL is trading below the average price target of $200.75. The highest price target of $240 implies a potential upside of 51.1% from current price levels.

On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.