Google parent Alphabet (GOOGL) is making headlines again, but not the kind employees hope for. The tech giant has informed workers in its “People Operations” and cloud divisions that job cuts are coming. As part of an internal shake-up, full-time employees in Google’s human relations department will be offered a voluntary exit program starting in early March.
These layoffs have come as Google sharpened its focus on efficiency. Finance chief Anat Ashkenazi has clarified that trimming costs is a top priority. While the company is pouring billions into artificial intelligence (AI) infrastructure in 2025, it is also facing a tough balancing act. Demand for AI products is soaring, and Google struggled to keep up last year. Now, with job cuts on one side and ambitious AI expansion on the other, all eyes are on Google stock.
About Google Stock
Headquartered in Mountain View, California, Alphabet (GOOGL) has expanded far beyond its origins as a search engine provider. It dominates cloud computing, ad-based video and music streaming, autonomous vehicles, healthcare, and more. In the world of online search, Google reigns supreme, commanding over 94% of global search traffic.
With a staggering market cap of $2.1 trillion, its influence is undeniable. Waymo, Google’s autonomous vehicle arm, is steadily steering the future of self-driving technology. Meanwhile, Verily’s life sciences division deepens Google’s presence in healthcare. Investors are taking notice. Over the past 52 weeks, GOOGL has soared 23.1%, outpacing the Nasdaq-100 Index's ($IUXX) 12.9% gain and the S&P 500 Index’s ($SPX) 15.1% rise.
Despite its outperformance, this tech giant remains a relative bargain among some of its “Magnificent Seven” peers and top cloud providers. At just 18.93 times forward earnings, GOOGL is priced well below Amazon’s (AMZN) 33.1x and Microsoft’s (MSFT) 30.01x.
Google’s Mixed Q4 Earnings
On Feb. 4, Google unveiled its financial results for the fourth quarter, which painted a somewhat mixed picture, resulting in a sharp 7.3% drop in its shares in the subsequent trading session. Revenue surged 11.8% year-over-year, reaching $96.5 billion, just shy of analysts’ expectations of $96.7 billion. But on the brighter side, EPS outperformed, jumping 31.1% year-over-year to $2.15, beating the consensus estimate of $2.12.
At the heart of this growth is Google’s advertising business, which continues to be the company’s driving force. Contributing a massive 75% of total revenue, Google’s ad segment saw a solid 10.6% year-over-year increase, bringing in $72.5 billion. Google Search and other revenues climbed 12.5% to $54 billion. But despite all these positives, what truly rattled investors was the company’s aggressive spending on AI.
With AI shaping the next phase of technological evolution, the company is doubling down on its investments. Capital expenditures for 2025 are projected at approximately $75 billion, with an estimated $16 billion to $18 billion allocated for the first quarter alone. Much of this will fuel the expansion of its technical infrastructure, prioritizing servers, data centers, and networking.
However, this spending spree comes at a time when many investors are growing uneasy about the relentless cash burn in AI investments. Earlier this year, Chinese AI startup DeepSeek unveiled a model that it claimed was built at a fraction of ChatGPT’s cost while delivering similar performance. This raises concerns over whether such massive AI spending by tech giants is truly necessary.
What Do Analysts Expect for Google Stock?
Nevertheless, confidence in GOOGL remains strong as analysts weigh in on the company’s performance and future potential. Needham analyst Laura Martin has reaffirmed a “Buy” rating on GOOGL shares, maintaining a price target of $225.
Martin highlighted the company’s impressive year-over-year revenue growth in Q4, which was largely driven by strong results in Google Search and Cloud. Meanwhile, Goldman Sachs analyst Eric Sheridan has raised his price target from $215 to $220, signaling optimism despite mixed earnings reactions.
Among 51 analysts covering GOOGL, 39 maintain a “Strong Buy,” while three recommend a “Moderate Buy.” Meanwhile, nine suggest a “Hold.” The consensus remains at a “Strong Buy.” With an average analyst price target of $218.47, the stock presents potential 28.2% upside, while the Street-high target of $240 suggests gains of up to 40.7%.
