Alphabet Revenue Jumped 12% in Q1. How Should You Play GOOGL Stock Here?

Alphabet (GOOGL) shares are inching up on Friday, April 25, after the tech behemoth reported market-beating results for its Q1.

The Mountain View, California-based firm earned $2.81 on a per-share basis in its recently concluded quarter on $90.23 billion in revenue. 

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Analysts, in comparison, were at $2.02 a share and $89.12 billion, respectively. Despite today’s surge, Google stock is down 20% versus its year-to-date high in early February. 

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Spots of Weakness in Google’s Q1 Earnings

While the titan’s quarterly update was largely positive, there were a few spots of weakness in the release that warrant caution in buying Google stock. 

For example, revenue from YouTube advertising as well as Google Cloud in the first quarter came in slightly below experts’ forecasts. Plus, traffic acquisition costs (TAC) also surpassed expectations in Q1. 

Google stock has been gasping for gains ever since President Donald Trump announced aggressive tariffs on dozens of other nations. On the earnings call, Philipp Schindler, its chief business officer, himself agreed that the company is “not immune to the macro environment.”

Against such a challenging macroeconomic backdrop, Gil Luria, a senior D.A. Davidson analyst, favors keeping on the sidelines in Google shares. 

Why Is Gil Luria Dovish on GOOGL Shares?

Luria currently rates Alphabet stock at “Neutral” and sees it fairly valued at $160, indicating potential downside of about 4% from current levels. 

Speaking yesterday with CNBC, Luria recommended caution on Google as its core Search business is losing users to AI chatbots, particularly the globally popular ChatGPT. 

According to the D.A. Davidson analyst, Google stands to take a material financial blow if OpenAI eventually enables advertising since a significant sum of ad dollars could then move away from search.

Google Remains a Favorite Among Other Street Analysts

Investors should note, however, that Luria’s view on Google shares is not widely shared by Wall Street analysts. 

According to Barchart, the consensus rating on GOOGL still sits at “Strong Buy” with the mean target of about $201 indicating potential upside of well over 20% from current levels. 

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On the date of publication, Wajeeh Khan 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.