Artificial intelligence driven competition in the internet search business will be top of mind for investors when Google-parent Alphabet reports fourth quarter earnings on Feb. 4. Google stock has climbed nearly 8% in 2025 heading into the earnings report.
Meanwhile, the emergence of Chinese startup DeepSeek has roiled artificial intelligence stocks, raising questions over huge capital spending by tech giants such as Alphabet. On Google's earnings call, Alphabet CEO Sundar Pichai will likely address questions over the company's long-term strategy in the wake of DeepSeek news.
Wall Street analysts project EPS growth of 29% to $2.12 with revenue growing 12% to $96.7 billion.
Also, Google's internet search advertising is expected to climb 11% to $53.29 billion, according to analysts polled by FactSet. YouTube ad revenue will grow 11% to $10.24 billion, analysts predict. Meanwhile, cloud computing revenue is expected to grow 32% to $12.1 billion.
Alphabet's new Chief Financial Officer, Anat Ashkenazi, is expected to lay out more of her priorities on the Q4 earnings call as Wall Street looks for more "operating efficiencies."
GOOGL Stock: 2025 Outlook
"Looking ahead to 2025, we are modeling $62.6 billion of capital spending, up 21% year-over-year, a significant deceleration vs. 60% forecasted growth in 2024 but 6% ahead of Wall Street's $59.1 billion," said Evercore ISI analyst Mark Mahaney in a report.
In 2025, analysts predict Google search advertising growth of nearly 10% to $216.5 billion.
Whether the internet giant is a buy depends on fundamental and technical factors as well as each investor's own goals, strategy and risk tolerance.
Also, Google stock belongs to the IBD Leaderboard. But Alphabet continues to under-perform some Magnificent Seven stocks.
GOOGL stock popped 37% in 2024, though it pulled back from a high of 201.42 set on Dec. 17.
Google Stock: Search Business Threatened
Generative AI startup OpenAI's ChatGPT continues to slowly gain market share. ChatGPT delivers answers to search queries while Google's business model has been based on providing web links. Also, startup Perplexity is another new rival. Perplexity is seeking a merger with TikTok.
Google is competing with OpenAI, Facebook-parent Meta Platforms and many others in building new foundation models. In December, Google unveiled its new artificial intelligence model, Gemini 2.0.
Google began deploying AI Overviews in the U.S. in mid May, with conversational summaries topping links for many search queries. In late October, Google launched AI Overviews in 100 countries
The AI Overviews system uses Google's in-house Gemini AI model. Advertisers utilizing Gemini AI tools see increased traffic and click-through rates, especially among younger demographics, Google says.
In December, Google announced the Willow quantum computing chip. Google has been a leader in quantum research. But quantum technology faces challenges.
GOOGL Stock: Waymo Expands
Meanwhile, Waymo on Dec. 5 announced that the company plans to expand its autonomous vehicle rideshare service to Miami in 2026. The Waymo One robotaxi service currently operates in Phoenix, San Francisco, and Los Angeles, with upcoming service already planned for Austin, Tex. and Atlanta. In Miami, Waymo will compete with Uber Technologies and other rideshare services. In Austin and Atlanta, Waymo is partnering with Uber.
Meanwhile, Waymo also disclosed that it has reached 150,000 trips per week, rapid growth from August levels at 100,00 per week. Waymo is widely viewed as the leader in autonomous vehicles. In October, Waymo closed a $5.6 billion funding round, including Google and previous investors. If Wall Street analysts start including Waymo in Alphabet's valuation, it would be a big development.
Also, ongoing antitrust lawsuits pursued by the Department of Justice hang over GOOGL stock.
Both Google's internet search and advertising businesses are under DoJ scrutiny.
Google Stock: YouTube, TikTok
Also, analysts say GOOGL stock is getting a boost from the Performance Max advertising platform. It automates buying across YouTube, internet search, display, Gmail, maps and other applications. Performance Max lets advertisers manage campaigns across all Google ad inventory.
Aside from Google's core internet search advertising business, Wall Street analysts view growth at YouTube and cloud computing as key. Another question is the performance of Google's hardware business, where it's battling Apple in smartphones.
Google aims to slow down the growth of TikTok with its own short video platform. How much money Google generates from YouTube Shorts is a key issue for 2024, analysts say. YouTube Shorts now generates roughly 70 billion daily views.
In cloud computing, Google is still the third biggest service provider, behind Amazon.com and Microsoft. Like Amazon Web Services and Microsoft' Azure business, Google's cloud unit has upped capital spending targeting the new opportunity in generative AI.
Google's 2022 acquisition of cybersecurity firm Mandiant for $5.4 billion seems to be paying dividends. Mandiant is part of Google's cloud-based cybersecurity services.
GOOGL Stock: Is It A Buy Or Sell Now?
Also, the Relative Strength Rating of Alphabet stock currently stands at 86 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google stock holds an Accumulation/Distribution Rating of B. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, Alphabet stock holds an IBD Composite Rating of 99 out of a best possible 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
On MarketSurge, GOOGL stock trades above a buy zone. And, long-time holders could take profits.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
