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Alphabet (NASDAQ: GOOGL, GOOG) is intensifying its focus on artificial intelligence (AI) as part of its strategic shift since 2015, aiming to transform operations and enhance user experiences across platforms like Search, Maps, and YouTube. Recent announcements from its May developer conference reveal innovative tools like Agent Mode, which can execute complex tasks independently.
In Q1 2025, Alphabet reported $67 billion in revenue, with 74% stemming from digital advertising, bolstered by AI-enhanced automated campaigns. Despite significant capital expenditures of $53 billion in 2024, the company achieved $73 billion in free cash flow, showcasing its robust financial position and commitment to further investments in AI and cloud computing.
Currently, Alphabet shares trade at a forward price-to-earnings ratio of 17.5, presenting a 22% discount compared to the S&P 500. This valuation and the ongoing AI transition highlight the potential for long-term investment in Alphabet.
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