No. of Recommendations: 17
https://www.cnbc.com/2025/07/23/alphabet-google-q2... Q2 TTM
Revenue : $96.43 ($92.52) $371B
EPS : $2.31 ($2.06) $9.39
Forward projections (next 4 quarters)
Revenue : $405B x 6.1x Revenue = $205 / share
EPS : $10.22 x 22x EPS = $230 / share
The stock is at around $190-$195 as it bounces around after hours, I have a "full boat" of shares and won't be adding (or selling) at these prices. Note my model is projecting revenue growth to be just under 10%, but the past 8 quarters have all been well above that - so the above projections might be a bit conservative.
If they can get to $410B in TTM revenue and the multiple expands to 6.5x you would get a tighter range of $220 - $230 / share.
Some higlights
* YouTube continues to impress
* Capital expenditures are increasing (a concerning trend)
* Genimi has 450 monthly active users
* Operating expenses growing faster than revenue (+20%) (a concern)
tecmo
...
No. of Recommendations: 18
My summary of the 2Q ;-)
Alphabet (GOOGL) reported a "standout" second quarter, with revenues climbing 14% to $96.4 billion, and net income jumping 19% to $28.2 billion. This robust performance translated to a 22% advance in EPS to $2.31, demonstrating significant momentum driven by the positive impact of AI across all aspects of the business.
Key Growth Drivers
All major segments delivered double-digit growth:
Google Search & other: Performance was strong, with AI expanding search usage and driving growth across all verticals, particularly retail and financials (notably insurance). New features like AI Overviews, now used by over 2 billion monthly users across more than 200 countries, 40 languages, contributed to Google Services revenues increasing 12% to $82.5 billion.
YouTube Ads: Revenues increased 13% to $9.8 billion. YouTube continues to dominate streaming, accounting for nearly 13% of all TV viewing and leading overall streaming time for the past two years.
Google Subscriptions, Platforms, and Devices: Revenues rose 20% to $11.2 billion, primarily due to increased YouTube subscriptions.
Google Cloud: Revenues surged 32% to $13.6 billion, with operating income more than doubling to $2.8 billion. This growth was propelled by strong performance in Google Cloud Platform (GCP) products, AI Infrastructure, and Generative AI Solutions. Cloud's annual revenue run rate now exceeds $50 billion. The segment's backlog also grew 18% to $106 billion, underscoring strong demand for Alphabet's comprehensive AI product portfolio despite supply constraints.
Other Bets and Financial Health
Waymo: Alphabet's autonomous driving unit continues to scale, expanding services in Atlanta, Austin, Los Angeles, and the San Francisco Bay Area. Waymo has now autonomously driven over 100 million miles on public roads and is testing in more than ten cities this year, including New York and Philadelphia.
Capital Expenditures: Operating cash flow increased 15% to $63.9 billion in the first half of the year. However, free cash flow decreased 20% to $24.3 billion due to a significant 57% increase in capital expenditures to $39.9 billion. These investments are crucial for building out data centers and servers to support future growth, particularly for Cloud services.
Capital Return: During the first half, the company repurchased $28.7 billion of its shares and paid approximately $5 billion in dividends.
Increased Investment: Given the strong and growing demand for Cloud products, Alphabet is increasing its planned capital expenditures for 2025 to approximately $85 billion, up from the previously planned $75 billion. The company anticipates a healthy return on this investment and is optimistic about future growth opportunities and the value it can provide customers.
Balance Sheet: Alphabet maintains a robust financial position with over $147 billion in cash and investments, $23.6 billion in long-term debt, and $362.9 billion in shareholders' equity as of June 30, 2025.
No. of Recommendations: 7
I added to my position shortly after earnings, at an average of about $193. I was already at maximum for a normal holding but I view GOOG as multi-faceted enough to make an exception (it's really a few great businesses rolled into a whole that's greater than its parts) and added a bit more.
Both the growth in search and the growth in cloud exceeded my already bullish expectations. I think AI has already started to disrupt search & advertising and GOOG is coming out the other end a clear winner, including for reasons set out by Manlobbi.
I'm not concerned about the capital expenses and view it has the flip side of the giant leaps being made in the Cloud business. On the call, Pichai mentioned there's currently a $106 billion dollar backlog. It is also clearly developing itself as a unique leader in the field, as evidenced by the OpenAI deal. They're laying railroads on a route not laid by others, metaphorically speaking, and have the balance sheet to do it. Some say others will be able do the same cheaper and as effectively, making the expense unnecessary, but I don't see how.
We may get a short term hit with the forthcoming litigation update. Hoping it is nothing that impairs the business.
No. of Recommendations: 8
We may get a short term hit with the forthcoming litigation update. Hoping it is nothing that impairs the business.
Markets tend to associate uncertainty with negativity rather than positivity, so whilst I obviously don’t know I predict a higher chance of the stock rising after the announcement than falling.
Ben Graham gave an example in which two companies in a legal battle would often both have a falling quote despite the legal battle being a zero sum gain with one receiving and the other losing the same capital. He used that example to illustrate how uncertainty irrationally leads to lower prices.
Furthermore Google’s legal departments will be working overtime to re-frame its operations to help its defense, and probably doing so in engenious ways that are beyond my intuition.
I noted for example the Search Circle feature (and other search mechanisms rumored) added to Android to have search *built in* rather than solely in the Chrome browser default; it is a search producing ads, anyway I’m rather certain a decision like that is done specifically with a careful study of the legal harm or benefits for their case.
I imagine by the time the legal situation is over and a little time we passed furthermore, Google’s multiple will gradually rise above 24, and earnings won’t be impacted meaningfully. (Of course it can be dragged down with an overall depressed market that can happen unpredictably, but relative to its peers it will at some point trade at nearer multiples than it is today.)
- Manlobbi
