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Recent reports have emerged that tech behemoth Alphabet’s (GOOGL) Google is looking to shore up its arsenal of Nvidia (NVDA) Blackwell chips to move ahead in the artificial intelligence (AI) race. Google is seemingly looking to rent the chips from the newly listed CoreWeave (CRWV).
As the AI battle heats up amid a global economic environment of heightened tariffs, this move by Google appears to be a strategic and proactive one.
However, is this enough of a step for Google to retain its position as one of the most prominent AI hyperscalers of the world? And after a 22% correction in share price in the year to date, is this an appropriate time to load up on Google stock? Let’s have a closer look.
Strong Fundamentals
Founded in 1998 as Google and restructured as Alphabet in 2015, the company, whose diverse portfolio includes the Google Search engine, Android operating system and Google Cloud, has never been in a better financial position.
The results for the most recent quarter saw the company reporting a beat on earnings for the eighth consecutive time. Revenues for Q4 2024 stood at $96.5 billion, up 11.8% from the previous year, while earnings surged by 31.1% in the same period to $2.15 per share. EPS came in ahead of the consensus estimate of $2.12.
Even though challenges emerged in its Search business from generative AI platforms like ChatGPT or its own Gemini platform, Google Search continued to remain the primary contributor to the company’s overall revenues at $54 billion (+12.5% YOY). Google Cloud at $12 billion was the next-biggest contributor as it grew at a healthy tick of 30.1% on a YOY basis, solidifying its presence as a “Top 3” player in the global cloud services market.
Analysts are expecting the company to report above-average growth in the coming year with forward revenue and earnings growth rates pegged at 12% and 20.63%, higher than the sector medians of 2.78% and 12.71%, respectively.
Long-Term Tailwinds (With Some Headwinds)
Google’s humongous cash pile and massive reach allow it to deploy its AI products on a global scale. In fact, the company has silently but efficiently embedded its Gemini AI system across all its major offerings such as Search and Android to Gmail, Chrome and even YouTube.
Moreover, the company has woven its Gemini AI suite deeply into its ecosystem — powering everything from Gmail and Chrome to Android, YouTube, and Search itself — giving it a silent but widespread presence in users’ daily digital lives.
Rather than dispersing its AI efforts across fragmented units, Google has consolidated its initiatives under the unified branding of Gemini and brought the research arm under Google DeepMind. This strategic integration has allowed the company to tighten the loop between development and deployment, with the result being a rapid rollout of Gemini-driven tools.
These AI-led upgrades are not only user-facing. Advertisers are now leveraging tools like Performance Max and demand generation to enhance returns, often achieving better outcomes and, in turn, increasing their ad spend across Google’s platforms. Simultaneously, consumers are engaging with generative features like AI-generated Search summaries and campaign optimization tools — all of which are aimed at keeping activity and spending within Google’s own digital environment. In the Cloud segment, there’s been a marked uptick in demand for Google’s AI infrastructure offerings, reflecting the broader enterprise shift toward AI integration.
Meanwhile, YouTube saw a major lift from political ad expenditures, which nearly doubled versus the last election cycle. The platform’s ad revenue climbed to $10.5 billion in Q4, reinforcing its stability. Adding to investor confidence, Google disclosed that viewers around the globe streamed over a billion hours of YouTube content per day on TV screens in the past year — surpassing engagement levels typical of legacy broadcasters.
Still, the company faces formidable headwinds, primarily from regulators. A late-2024 Department of Justice decision dealt a blow to Google’s Search-advertising framework, with the fallout expected to materialize in 2025 — potentially altering how ads are integrated within Search results. Compounding this are continued legal battles in Europe, where the Digital Markets Act and past rulings have triggered hefty fines and ongoing scrutiny over the company’s bundling and platform practices.
Adding pressure to the mix is the AI investment surge from rivals like Amazon (AMZN) and Microsoft (MSFT). The sheer scale of capital being deployed by these firms underscores the intensity of the competition, leaving Google with little room to scale back on its own aggressive AI expansion strategy.
Analyst Opinions on GOOGL Stock
Taking into account all of these factors, analysts have deemed the stock a “Strong Buy” with a mean target price of $215.70 which indicates uspide potential of about 46% from current levels. Out of 53 analysts covering the stock, 41 have a “Strong Buy” rating, three have a “Moderate Buy” rating, and nine have a “Hold” rating.
