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Is Alphabet the Winner in the Current Phase of the Correction for Investment Portfolios?

April 28, 2025

The earnings season is in full swing, with many key players reporting their quarterly results, with Alphabet, Google's parent company, receiving the latest attention from investors. The numbers indicate one thing. The current market environment, which is significantly influenced by the broader trend of capital market correction, creates space for investors to think. What to buy and where to redirect capital for the next period? Alpabet's results can help you solve this dilemma.

 Is Alphabet the Winner in the Current Phase of the Correction for Investment Portfolios?

Tens of percent growth

The claim about the investment attractiveness of this giant can be justified based on several factors. First on the list is revenue, which reached $90.23 billion, which represents a year-on-year growth of 12%. At the same time, in this case, it is a traditional exceeding of analysts' expectations at the level of 89.12 billion. Slightly more fundamental is the net profit, which increased by a significant 46% year-on-year to $34.54 billion. This pair of basic financial indicators thus provides a stable background for the company to expand, as well as to maintain their competitive advantage.

From the point of view of individual segments, the search business was again dominant, bringing in $50.7 billion, which is an increase of 9.8% compared to last year. In addition, advertising revenue as a whole rose 8.5% to $66.89 billion. Another division that also fundamentally contributed to the work was the cloud division. Its revenue grew 28% year-over-year to $12.26 billion, with an operating margin nearly doubling year-over-year to 17.8%, indicating a significant improvement in the efficiency of internal business processes.

The largest acquisition in history

An important milestone is also the announced acquisition of the Israeli cyber-security company Wiz worth USD 32 billion, which historically ranks first in terms of volume. Of course, the goal is to strengthen Google Cloud's security capabilities and better compete with players like Microsoft Azure and AWS. The transaction is expected to close in 2026, but remains subject to approval by competent regulators.

Waymo is growing and expanding

Interesting news also came from the segment of autonomous technologies. The Waymo division, which operates robotic taxi services, reports a significant increase in the number of paid rides. In March, it reached the level of 250,000 per week, which is 50,000 more than in February. Atlanta should join the existing American cities where the company provides rides this summer, thanks to cooperation with Uber. Alphabet is also considering expanding to include the sale of passenger cars with their autonomous systems.

Buybacks and capital expenditures

When asked about the company's attitude towards shareholders, it is crucial to note the share buyback approved by the board of directors, in the amount of USD 70 billion, which is the same volume as in 2024. On the other hand, the expected capital expenditure for 2025 is set at USD 75 billion, with the specific amount of investment later depending on delivery deadlines and construction schedules.

Macro risks in advertising

Macroeconomically, Alphabet also points to a slightly negative impact in advertising, specifically in the Asia-Pacific region, caused by the new US trade policy. This is primarily the abolition of the so-called "de minimis" exemption for duty-free imports of goods into the United States with a maximum value of USD 800. The modification will come into force on May 2, 2025, and companies such as Temu or Shein, which are defined by a very aggressive advertising strategy, are likely to feel it the most.

Conclusion

Overall, Alphabet's results can be assessed very positively. The company confirms that it has a diversified growth profile, a strong position in search, in the cloud, but also in the field of artificial intelligence and autonomous technologies. For investors, it represents a combination of stable growth, innovation potential and strong returns through share buybacks, which confirms that Alphabet is one of the highest quality large technology companies on the market. [1]

[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. Forward-looking statements involve risk and uncertainty by their nature because they relate to future events and circumstances that cannot be foreseen, and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.    

Warning! This marketing material is not and should not be construed as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency can affect returns due to fluctuations. All securities trades can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s., regulated by the National Bank of Slovakia.

Resources:

https://www.cnbc.com/2025/04/24/alphabet-googl-q1-earnings-report-2025.html

https://www.cnbc.com/2025/04/24/waymo-reports-250000-paid-robotaxi-rides-per-week-in-us.html

https://www.reuters.com/technology/cybersecurity/google-agrees-buy-cybersecurity-startup-wiz-32-bln-ft-reports-2025-03-18/

https://abc.xyz/assets/0d/82/1464241c40ca89c5981759fc541c/2025q1-alphabet-earnings-slides.pdf

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