Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.

Alphabet Inc.

Key Points
Nvidia's long-term growth opportunity might be bigger than anyone can imagine.
Wall Street continues to underestimate Google's AI technology and competitive position in search.
The markets are still reaching new highs in the middle of the year. The Nasdaq Composite is currently up 9.1% year to date at the time of writing.
In the aftermath of the market sell-off earlier this year, two top tech stocks asserted their dominance in the second quarter. Since April 1, Nvidia (NASDAQ: NVDA) shares are up 57%, while shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) are up 22%. Here's why these stocks could outperform for the rest of 2025 and remain rewarding investments for the long term.
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1. Nvidia
Nvidia is providing mission-critical technology to power the revolution in artificial intelligence (AI). It focuses on developing graphics processing units (GPUs), which were originally designed for graphics-intensive software like video games, and are now being used by the most powerful supercomputers. The company's market cap is now over $4 trillion, making it the most valuable company in the world.
Nvidia controls around 90% of the data center GPU market. Its hardware is found in all the leading data centers and used by leading AI researchers like OpenAI, and these customers continue to pour billions into new chips.
Last year, revenue doubled to $131 billion, and the current Wall Street consensus forecast has that reaching $200 billion this year.
All signs point to Nvidia's revenue continuing to grow into the hundreds of billions of dollars over the next several years, as the company's addressable market continues to expand. For example, nations around the world are building their own sovereign AI infrastructure to be less dependent on foreign AI models that weren't trained on their own languages and cultures. Nvidia CEO Jensen Huang says this is a $1.5 trillion opportunity.
Because there's no substitute for Nvidia's ultrapowerful GPUs, the company stands to generate substantial wealth for long-term investors. On top of the sovereign AI opportunity, Nvidia also should benefit from growth in robotics and autonomous vehicles. Huang sees the potential for robots to be the next multitrillion-dollar industry.
If you didn't buy shares during the stock's recent dip, you shouldn't feel you missed out. It's still trading at a reasonable forward earnings multiple of 40; this is within its trading range over the last three years. Long-term, the stock still offers substantial upside as it capitalizes on the global investment pouring into AI from every industry.
2. Alphabet (Google)
Alphabet has a strong competitive moat based on billions of people who use Gmail, YouTube, Search, and its other services every day. The company reported another stellar earnings report for the second quarter, beating expectations, and showing why it's a leading AI company to bet on for the long term.
The large number of people who use Google services continued to fuel strong growth in advertising revenue in the second quarter. Alphabet said total revenue grew 14% year over year, with net income surging 19%, and earnings per share up 22%.
Solid growth in Google Search revenue eased fears that competing AI models from xAI and OpenAI are hurting Google's core business. Search revenue hit a record $54 billion, up 12% year over year. This growth indicates healthy advertising demand, as users engage with Google's AI Overviews feature, which puts a convenient summary at the top of a search query.
Another key indicator of Google's competitive position is strong growth in the cloud business. Google Cloud has been gaining share in a $348 billion cloud market, according to Synergy Research. Revenue hit $13.6 billion in Q2, up 32% year over year. Google Cloud continues to show impressive margin improvements, with operating income increasing from $1.2 billion in Q2 2024 to $2.8 billion in the recent quarter.
These results indicate that Alphabet stock is undervalued. Despite prospects for double-digit earnings growth in the coming years, you can buy the stock at a forward P/E of just 20, which looks like a steal for this Magnificent Seven company. The stock seems in the process of being revalued by the market and might be trading at a higher P/E entering 2026, so it may outperform market averages.
Should you invest $1,000 in Nvidia right now?
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Top Stocks That Could Dominate the Rest of 2025

Key Points
Revenue rose 14% to $96.4 billion in Q2 2025, Topping the consensus by $2.44 billion.
EPS reached $2.31 for Q2 2025, topping analyst expectations.
Google Cloud revenue grew 32% year over year in Q2 2025, more than doubling operating profits.
Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), the technology conglomerate behind Google and YouTube, reported its second-quarter results on July 23, 2025. Key highlights included strong double-digit growth in revenue and earnings, with performance exceeding analyst estimates on both fronts. GAAP revenue totaled $96.4 billion, above the $94 billion consensus, while EPS came in at $2.31 compared to the $2.18 estimate. Net income also registered a 19% year-over-year increase.
This quarter highlighted robust demand across core product lines -- especially Google Cloud -- alongside the successful rollout of new artificial intelligence features. However, management flagged that expense growth, particularly in capital spending and legal costs, is rising and should be monitored in the coming quarters.
Metric
Q2 2025
Q2 2025 Estimate
Q2 2024
Y/Y Change
EPS
$2.31
$2.18
$1.89
22%
Revenue
$96.4 billion
$94 billion
$84.7 billion
14%
Operating margin
32.4%
32%
0.4%
Net income
$28.2 billion
$23.6 billion
19%
Free cash flow
$5.3 billion
$13.5 billion
(60%)
Company Overview and Business Focus
Alphabet is the parent company of Google, YouTube, and a range of tech ventures, spanning online search, video, cloud computing, and experimental projects. Its core revenue stream comes from digital advertising delivered through its various platforms, including the widely used Search service and video platform YouTube. Other business lines include Google Cloud, which offers infrastructure, software, and artificial intelligence (AI) solutions to businesses, and “Other Bets,” which covers its early-stage, high-risk investment projects such as self-driving car technology.
Recently, Alphabet has focused on deploying artificial intelligence innovations across its primary services. AI development is now closely tied to every segment, as seen in major product launches and upgrades like the Gemini AI model. Google Cloud’s expansion, ongoing advertising improvements, and investments in “moonshot” initiatives remain central to Alphabet’s long-term strategy. Success depends on sustaining growth in digital advertising, demonstrating AI leadership, scaling cloud services, and managing costs amid rising investments and regulatory challenges.
Quarter in Detail: Performance Highlights and Key Developments
Alphabet reported GAAP revenue of $96.4 billion, representing a 14% increase over the year-ago period, outpacing analyst forecasts by $2.438 billion (GAAP). This growth was broad-based, with Google Search & Other, YouTube Ads, and Google Cloud each delivering double-digit growth. Google Services, which includes Search, Ads, and YouTube, saw GAAP revenue climb to $82.54 billion, a 12% increase. Advertising contributed $71.34 billion (GAAP), with Search & Other revenue (GAAP) at $54.19 billion, YouTube Ads at $9.80 billion (up 13.1%), and a slight 1.2% year-over-year decline in Google Network revenue.
Artificial intelligence powered much of this momentum. Management noted, “We are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business,”. New AI features in Search, such as AI Overviews and AI Mode, contributed to higher engagement and monetization at approximately the same rate as traditional Search. Paid subscriptions, platforms, and devices revenue grew 20% year-over-year, driven by offerings like Google One and YouTube Premium.
Google Cloud was a standout, with revenue growing 32% to $13.62 billion. Operating income more than doubled to $2.83 billion from $1.17 billion in the prior year for Google Cloud. Management cited strong demand for cloud-based AI infrastructure and generative AI solutions. Google Cloud’s annual revenue run-rate surpassed $50 billion, underscoring its scale and continued acceleration. Product developments included the debut of next-generation AI models and further integration of AI into the Cloud platform’s suite.
The Other Bets segment, which includes early-stage projects such as autonomous driving (Waymo) and healthcare, had GAAP revenue of $373 million and an operating loss of $1.25 billion. No major breakthroughs or inflection points occurred in this segment during the period. These results remain consistent with expectations of continued investment rather than immediate profitability.
Regulatory and legal pressures were notable this period. General & Administrative expenses (GAAP) rose 65% to $5.2 billion year-over-year. Alphabet reported that some of this cost growth was tied to settlement charges and flagged that legal and compliance pressures are likely to persist. Management specifically referenced the “charge related to a settlement in principle of certain legal matters.”
On expense control, Alphabet’s operating margin was 32.4%, despite a surge in research and development, which rose 16.4% year-over-year. Headcount rose to 187,103, an increase of 4.2% from a year ago. Free cash flow, a measure of money available to fund operations or return to shareholders, dipped sharply to $5.3 billion for the quarter from $17.6 billion a year ago.
The balance sheet remains strong, with $95.148 billion in cash, cash equivalents, and marketable securities as of June 30, 2025. The company issued $12.5 billion in senior unsecured notes, increasing long-term debt to $23.6 billion as of June 30, 2025. Alphabet continued its program of share repurchases and raised the quarterly dividend by 5 %, supported by its robust cash position.
Looking Ahead: Guidance and What to Watch
Management increased its capital expenditure guidance for 2025 to approximately $85 billion, citing demand for AI infrastructure and expanded cloud computing capacity. This marks a $10 billion increase from previous expectations. No explicit guidance was provided for future revenue or profit growth rates.
Other areas flagged for investor attention include ongoing legal and regulatory risks, as well as competitive pressures in the digital advertising and cloud computing markets. Leadership highlighted that cloud revenue growth could fluctuate quarter to quarter as new customer demand and infrastructure come online. Challenges in profitability for the Other Bets division remain, with continued large operating losses and no material revenue lift. Alphabet’s ability to balance innovation-driven spending with cost discipline will be important going into the second half of 2025.
GOOG pays a dividend. The quarterly dividend was raised 5 % for the period.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alphabet Posts 14% Revenue Gain in Q2

After reaching an important support level, Alphabet Inc. (GOOG) could be a good stock pick from a technical perspective. GOOG recently experienced a "golden cross" event, which saw its 50-day simple moving average breaking out above its 200-day simple moving average.
A golden cross is a technical chart pattern that can signify a potential bullish breakout. It's formed from a crossover involving a security's short-term moving average breaking above a longer-term moving average, with the most common moving averages being the 50-day and the 200-day, since bigger time periods tend to form stronger breakouts.
Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb to higher prices.
A golden cross is the opposite of a death cross, another technical event that indicates bearish price movement may be on the horizon.
GOOG could be on the verge of a breakout after moving 8.9% higher over the last four weeks. Plus, the company is currently a #3 (Hold) on the Zacks Rank.
Looking at GOOG's earnings expectations, investors will be even more convinced of the bullish uptrend. For the current quarter, there have been 15 changes higher compared to none lower over the past 60 days, and the Zacks Consensus Estimate has moved up as well.
With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on GOOG for more gains in the near future.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Should You Buy Alphabet Inc. (GOOG) After Golden Cross?

Key Points
Alphabet successfully integrated AI across its search, cloud, and YouTube businesses at unmatched scale.
IBM quietly transformed itself from a legacy technology company to a prominent enterprise AI player.
Both Alphabet and IBM are trading at significant valuation discounts to their peers.
The year 2025 has been very volatile for the stock market. Currently, the benchmark S&P 500 index is trading at nearly 29 times its trailing earnings, far higher than its historical median of 17.9 times.
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While this signals stretched valuations in the market, not all artificial intelligence (AI) stocks joined the frenzy. There are still companies, such as Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and International Business Machines (NYSE: IBM), that possess cutting-edge AI capabilities, scale, brand name, and solid financials, trading at modest valuations.
Here's why these stocks seem impressive picks in July 2025.
Alphabet is one of the few AI powerhouses that surprisingly remained affordable amid the AI-driven technology rally. Currently trading at just 18.7 times forward earnings, the company is significantly cheaper than other technology giants, such as Microsoft, which trades at 32.8 times forward earnings, and Nvidia, which trades at 36 times earnings.
This discounted valuation appears highly unjustified considering Alphabet's exceptional financial strength and its robust and comprehensive AI ecosystem, which is strengthening its Search business as well as Google Cloud and YouTube.
Alphabet delivered stellar performance in the second quarter of fiscal 2025 (ending June 30), with revenues and earnings surpassing consensus expectations. The company generated revenues of $96.4 billion, a 14% increase year over year, while net income reached $28.2 billion, representing 19% growth. This performance was mainly driven by the exceptional growth of its AI and cloud business.
Alphabet's AI Overviews (a feature that provides direct answers and summaries at the top of search results) is currently serving over 2 billion users monthly across more than 200 countries and 40 languages. This is helping drive commercial queries for its Search business.
Alphabet's Google Cloud business is also experiencing rapid growth, with deals over $250 million doubling year over year and the company signing the same number of billion-dollar deals in the first half of 2025 as in all of 2024. The recent OpenAI deal to use the Google Cloud platform as an infrastructure provider for its ChatGPT can prove to be a major catalyst in the long run.
YouTube also dominates streaming, with over 200 billion daily views on YouTube Shorts. It's No.1 based on streaming time in the U.S.
Alphabet's Gemini 2.5 Pro "thinking" AI model has shown improved performance compared to competitors in several complex tasks at lower costs. This technological edge appears to have driven an 80% surge in usage for the Google AI Studio platform and the Gemini API in April 2025. Nearly 9 million developers have already used the Gemini 2.5 models.
Finally, although the market has become concerned about Alphabet's decision to increase capital spending to $85 billion in 2025 compared to the prior estimate of $75 billion, these strategic AI infrastructure investments will prove beneficial for the company in the long run. The company also boasts a very healthy balance sheet with $95 billion in cash at the end of Q2. It generated $66.7 billion in trailing-12-month free cash flow.
While the risks of disruption in the search market from AI browsers cannot be ignored, Alphabet's Q2 results have demonstrated the company's ability to monetize AI successfully. Considering all the factors, Alphabet appears to be a solid pick in 2025.
International Business Machines
International Business Machines, commonly referred to as IBM, remains a significant enterprise AI player that Wall Street surprisingly overlooked for the past several years. The stock has crashed after an impressive Q2 fiscal 2025 performance likely due to a weaker-than-expected software performance. Trading at 26.5 times forward earnings, the company is also valued at a significant discount compared to technology giants like Microsoft and Nvidia.
The $34 billion acquisition of Red Hat transformed IBM from a legacy technology company into a significant player in the AI and hybrid cloud space. Red Hat business reported a 14% year-over-year revenue jump in Q2. OpenShift, Red Hat's hybrid cloud platform, reported a 20% year-over-year rise in revenues and reached annual recurring revenues (ARRs) of $1.7 billion.
Unlike many technology competitors focusing on the consumer AI segment, IBM is targeting the enterprise AI market, especially in regulated industries and those involving complex hybrid cloud requirements. The company's full-stack AI suite watsonx, which leverages Red Hat's infrastructure, enables secure and compliant AI use in sectors such as finance, banking, and government. The recently announced acquisition of start-up Seek AI will further strengthen the watsonx platform with natural language capabilities.
All these initiatives have translated into IBM's generative AI book of business now standing at $7.5 billion inception-to-date in Q1, significant growth from $6 billion reported in the previous quarter.
The overall software business (including Red Hat, automation, data, and transaction processing) reported 8% year-over-year growth in Q2, while annual recurring software revenue reached $22.7 billion, a 10% year-over-year increase. Software now accounts for 45% of IBM's business, with highly recurring revenue streams.
IBM's infrastructure business delivered exceptional results in Q2, with revenues growing 11% year over year. IBM Z (a family of high-performance, mainframe computers for mission-critical workloads) revenues increased 67% year over year in the same period. Demand has been strong for the z17 next-generation mainframe.
Considering the many tailwinds, the stock can prove to be a worthwhile addition to the investor's portfolio.
Should you invest $1,000 in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
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*Stock Advisor returns as of July 21, 2025
Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, International Business Machines, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Artificial Intelligence (AI) Stocks That Are Still on Sale After the Tech Rally

Key Points
Alphabet turned in a strong quarter, led by cloud computing growth.
Its Google search business saw growth accelerate in the quarter, helped by its AI Overviews.
The stock is cheap for a company with a lot of opportunities ahead.
Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) once again defied its critics who continue to believe the company will be a loser in artificial intelligence (AI). Not only did the company once again produce strong search revenue growth in its most recent earnings report, but that growth accelerated. In addition, Alphabet said that AI was positively impacting every part of its business.
With cloud computing demand continuing to surge, the company upped its capital expenditure (capex) budget by an additional $10 billion to build out its data center capacity. It said in its Q2 earnings report that it now plans to spend $85 billion in capex this year, and anticipates spending even more in 2026, given the strong demand it's seeing for Google Cloud products and services.
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AI driving growth
AI was the biggest growth driver behind Alphabet's strong results, with cloud computing once again leading the way. Google Cloud revenue surged 32% to $13.6 billion in the second quarter, while segment operating income skyrocketed from $1.2 billion a year ago to $2.8 billion. However, the company said its current capacity constraints could extend into 2026, despite its large capex investments. Ultimately, that's not a bad problem to have, as it's just a sign of how strong demand is.
Alphabet called out its Gemini 2.5 models as catalysts for growth, saying that 9 million developers have now built with Gemini. It also noted how leading AI research labs are turning to use Google's Tensor Processing Units (TPUs) as their AI chips of choice.
While cloud computing is leading the way with growth, all eyes continue to be on Alphabet's core Google Search business. On that front, the company once again delivered. Google Search revenue climbed 12% to $52.2 billion, which was an acceleration from the 10% growth it saw in Q1. Alphabet said over 2 million people in more than 200 countries use AI Overviews monthly, while AI Mode has over 100 million monthly active users, despite only being launched in the U.S. and India so far. It said that AI is contributing significantly to increased search usage, with AI Overviews now driving over 10% more queries globally.
Meanwhile, the Gemini app now has more than 450 million monthly active users. Alphabet said the number of daily requests on the app jumped over 50% sequentially. The company also called out its strength in multimodal search, with Google Lens and Circle to Search. It said visual searches grew 70% year over year, and that many are shopping queries.
YouTube continues to deliver strong results, with ad revenue rising 13% to $9.8 billion. YouTube, along with Google One (cloud storage) and Music, also helped drive a 20% increase in subscription and device revenue to $11.2 billion. The company said Shorts are becoming a significant contributor, and that the format allows for more ad opportunities on average. It recently introduced Veo 3 to Shorts; the AI tool can create videos from photos and add generative effects to make content creation easier on the platform.
Alphabet is also continuing to expand its Waymo robotaxi business. It recently launched in Atlanta and is currently testing the service across 10 cities, including New York and Philadelphia. It hopes to launch the service in all 10 cities in the near future.
Overall, Alphabet grew total quarterly revenue by 14% (13% on a constant currency basis), to $96.4 billion. Earnings per share jumped 22% year over year to $2.31. The results easily surpassed analyst consensus estimates (as compiled by LSEG), which were looking for EPS of $2.18 on revenue of $94 billion.
Looking ahead, Alphabet said it was cautious on the advertising outlook because it's lapping strong spending in the financial services vertical last year and will see no benefit from political ad spending this year. However, it does expect to see a tailwind in Q3 from current foreign exchange rates.
Is it time to buy the stock?
Alphabet yet again turned in a strong quarter, demonstrating that the company is on track to be an AI winner. It continues to see solid growth in its search business, though its new AI Mode is currently only in two countries. Gemini has become a top AI model. And with the huge distribution edge it has with the Chrome browser and Android operating system, the company is well positioned in a shifting AI-search landscape.
At the same time, Google Cloud continues to be a monster, generating robust revenue growth; it has scaled up to the point that it now has incredible operating leverage. Throw in the strength at YouTube and the emerging Waymo robotaxi business, and Alphabet is cooking.
Best of all, you can still get into Alphabet stock on the cheap. The stock only trades at a forward price-to-earnings ratio (P/E) of around 19 times 2025 analyst estimates, and a forward price/earnings-to-growth ratio (PEG) of 0.8. (Stocks with PEG ratios below 1 are typically considered undervalued.)
With AI helping drive growth and Alphabet's AI push only accelerating, now is a great time to buy the stock.
Should you invest $1,000 in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
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*Stock Advisor returns as of July 21, 2025
Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Alphabet's AI Push Is Accelerating -- Is the Stock a Buy Now?

Key Points
OpenAI running some of its workloads on Google Cloud is a big deal for Alphabet.
Alphabet's stock remains undervalued despite a one-day surge following Q2 earnings.
OpenAI is well recognized as one of the leaders in the generative AI world, as it was the first to reach mainstream usability with its ChatGPT product. OpenAI has maintained its position and is a clear example of the first-mover advantage. OpenAI's partnership with Microsoft (NASDAQ: MSFT) is well known, as are the struggles between the two. That's what makes this announcement such a big deal.
In addition to Microsoft, OpenAI will also use Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Cloud servers to run ChatGPT prompts on. That's a significant development for Alphabet, and it could cause shares of its undervalued stock to surge as the market digests this news.
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Google Cloud is growing at a quick pace
Alphabet is a multifaceted business. While its legacy Google Search business dominates its financials, the company also operates other platforms, including Google Cloud, Waymo, and the Android operating system.
Google Cloud is Alphabet's cloud computing wing and provides clients with computing power that would be very expensive to build themselves. By building out massive data centers and renting out capacity to clients, Alphabet can make a solid profit, as it has proven quarter after quarter. In Q2, Google Cloud's revenue increased 32% year over year, yielding a 21% operating margin. While these are strong numbers, Google Cloud's margins can drastically improve from these levels.
In Q2 of 2024, its operating margin was 11%, so its Q2 2025 numbers represent a significant improvement over the year-ago period. However, industry leader Amazon Web Services (AWS) delivered a 39% operating margin during Q1. Google Cloud still has a way to go before catching up to AWS, but that's also good news for investors, as it shows there is still plenty of growth in store.
But that doesn't explain why Alphabet trades at such a discount to the market.
The market is still concerned about the Google Search engine's future
The S&P 500 index (SNPINDEX: ^GSPC) trades for 23.8 times forward earnings. However, Alphabet's stock trades at a discount to that figure, 20 times forward earnings.
However, this discount doesn't make sense because Alphabet is performing well financially. In Q1, its revenue rose 14% year over year with diluted earnings per share (EPS) rising 22%. Most companies with those growth rates would have a forward price-to-earnings (P/E) valuation in the high 20s to low 30s, but not Alphabet.
The market is worried about Google Search losing market share to various generative AI services -- the very technology that OpenAI just moved onto Alphabet's servers. However, this isn't showing up in Alphabet's results.
In Q2, Google Search's revenue increased 12% year over year. Compared to the 10% growth experienced in Q1, this marks an acceleration of growth, clearly indicating that Google Search isn't going anywhere.
Additionally, the strong double-digit growth Alphabet reported is more than enough to outperform the market, which is why shares surged the day following the earnings release. Still, that's not nearly enough of a gain to value Alphabet among its big tech peers. The combined catalyst of ChatGPT running some of its workloads on Google Cloud's servers and the realization that Google Search isn't fading away anytime soon should be enough to convince the market that Alphabet's stock is worth far more than it's valued at today.
As a result, I believe Alphabet is one of the top stocks to buy now, as it offers value in a market that has become increasingly expensive.
Should you invest $1,000 in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Keithen Drury has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

OpenAI Just Made a Major Announcement That Could Cause This Undervalued Artificial Intelligence (AI) Stock to Soar

Key Points
Income-seeking investors have a difficult choice between dividend stocks that grow their payouts quickly and those that offer high yields.
Alphabet shares offer a minuscule yield at recent prices, but earnings are growing by leaps and bounds.
AT&T offers a high yield, but it has been several years since shareholders last saw its quarterly payout grow.
Investors looking to grow their passive income stream with dividend stocks have two basic options. Dividend payers that raise their payouts rapidly tend to offer low yields up front, while higher-yielding stocks tend to increase their payouts slowly, if at all.
Right now, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) and AT&T (NYSE: T) represent opposite ends of the dividend investors' dilemma. Profit that could be used to boost dividend payments are surging for the parent company behind Google and YouTube, but it offers a very low yield. AT&T offers a high yield, but earnings have been rising at a snail's pace.
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Let's take a closer look at both to see which could be a better fit for your portfolio.
1. Alphabet
Last year, Alphabet began a dividend program, and it's already raised the payout once. This April, the company bumped its payout up by 5% to $0.21 per share. While significant, the raise was much smaller than it could probably afford.
With a yield of about 0.4% at recent prices, Alphabet is not on many dividend investors' radar. If you have a long time horizon, though, adding this stock to your portfolio could lead to heaps of income generation once you're ready to retire.
When viewed on a long-term timeline, earnings per share and dividend payments tend to rise in line with each other. Over the past five years, Alphabet raised earnings per share by a whopping 29.4% annually. The conglomerate's advertising and cloud computing businesses generated around $66.7 billion in free cash flow over the past 12 months. Dividends over the same time frame worked out to less than 15% of the free cash flow available to make the payments.
Alphabet was a bit slow to release generative artificial intelligence tools, but strong advantages mean it's likely to own the most popular AI-driven search tools for years to come. Despite Microsoft promoting its Edge browser on everyone's PC, Alphabet's Chrome browser had aglobal marketshare of 68% in June, according to Statcounter.
Google Search and the Chrome browser are defaults on Alphabet's Android operating system, which runs on 74% of the world's smartphones. With Android and Chrome giving Alphabet access to billions of users and all the data their browsing activity generates, its lucrative advertising business has a good chance to stay on top for the long run.
2. AT&T
While profit at Alphabet has been surging, the telecom giant, AT&T, has been lumbering along. Earnings per share over the trailing 12 months are only 15.8% higher than they were five years ago.
The spinoff of its media assets a couple of years ago is partly responsible for the lack of growth, and so is the ongoing loss of wireline phone connections. These issues are temporary, but the company's position in America's mobile internet oligopoly is likely to remain intact for many years to come. This gives it a chance to continue growing through sales of its wireless internet and mobility services.
AT&T reduced its dividend in 2022, and it hasn't budged since. At recent prices, the stock offers a 4% yield, which is roughly 10 times more than you'd receive from Alphabet.
AT&T doesn't have Alphabet's immense cash flow, but it's more than enough to meet its dividend obligation. Free cash flow that reached $19.6 billion over the past 12 months was more than twice what the company needed to meet its dividend obligation. Management expects free cash flow to subside slightly to a little over $16 billion this year, which is still plenty more than necessary to maintain the payout.
Business wireline revenue is expected to decline again this year, but AT&T has growth engines pushing in the opposite direction. This year, mobility revenue is expected to grow by 3% or better, plus its consumer broadband products are surging. Second-quarter consumer fiber broadband revenue soared by 18.9% year over year to $2.1 billion and is expected to continue at a similar pace for the rest of 2025.
Don't let the proliferation of mobile virtual network operators such as Cricket and Mint confuse you into thinking there's a lot of competition for mobile internet subscribers. After T-Mobile acquired Sprint in 2020, Americans effectively have just three nationwide mobile internet providers to choose from.
By revenue, AT&T is firmly in second place. Given the enormous investment required to reach its present position, we aren't likely to see any more competitors able to provide nationwide mobile internet services unless Congress forces one of the big three to break up.
Dividends at AT&T probably won't grow quickly, but the company could begin announcing annual payout bumps soon. Earlier this year, it reduced debt to about 2.5 times trailing 12-month EBITDA and initiated a $10 billion share repurchase program.
Which is the better dividend stock to buy now?
I don't intend to begin leaning on the passive income my dividend stocks generate for at least 20 years. With this in mind, I'm a lot more excited to buy Alphabet.
If we project these two companies' rates of earnings growth over the past five years forward, the yield on cost investors receive from Alphabet shares purchased now could surpass the amount they receive from AT&T by 2035. If I were much closer to retirement, I might consider AT&T the better buy. With time to let the payout grow, though, I'd be better off over the long run with shares of Alphabet.
Should you invest $1,000 in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool recommends T-Mobile US and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Better Dividend Stock: Alphabet vs. AT&T

Key Points
Amazon Ads leverages Amazon’s strengths.
Amazon's ad business is already a $50+ billion powerhouse.
There are multiple levers to grow this business.
For years, Amazon's (NASDAQ: AMZN) story has centered on e-commerce and cloud computing. But another engine is gaining speed -- one that's high-margin, fast-growing, and still underappreciated. That's Amazon Ads.
What makes this business so powerful is its strategic position at the intersection of intent, data, and transaction. With Prime Video turning on ads, Amazon is unlocking a powerful new layer of monetization.
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This new business isn't just an additional revenue stream. It's a strategic opportunity, and it could significantly reshape Amazon's long-term outlook.
Why advertising makes perfect sense for Amazon
Founded as an online bookstore, Amazon has evolved into a massive conglomerate with multiple business engines. One of the most promising of these businesses is Amazon Ads.
Advertising makes strategic sense for Amazon because it leverages what the company already does best: capturing intent and converting it into action. That creates rare, high-intent digital real estate that brands are eager to pay for. Amazon doesn't need to build new traffic sources or create new content -- it simply monetizes what's already happening on its platform.
Besides, what sets Amazon apart is closed-loop attribution, marketing speak for tracking every part of the customer's experience with an ad. It doesn't just show ads; it sees what converts -- down to the product, basket size, and reorder frequency. That makes its ad platform one of the most efficient in the world.
So, at the core of Amazon's ad model is the ability to monetize consumer intent using vast amounts of shopping, search, and behavioral data. It's part of the broader retail media trend in which retailers use first-party data to help brands target customers more effectively than traditional platforms can. Amazon's scale and data make it one of the most powerful players in this space.
Amazon Ads by the numbers
Amazon's advertising arm isn't just a side hustle; it's becoming a significant driver of revenue growth.
In 2024, Amazon generated $56 billion in advertising revenue, an 18% increase from the prior year. That makes it the third-largest digital advertising company in the world, behind only Alphabet's Google and Meta Platforms. The momentum continued in the first quarter of 2025, when Amazon Ads generated $13.9 billion, an increase of nearly 18% year over year, while total company revenue rose by just 9%. That gap highlights how advertising is scaling up faster than Amazon's traditional business.
While Amazon doesn't break out ad profitability, this business carries an operating margin higher than its e-commerce or logistics operations. In other words, advertising will gradually raise the company's operating margin over time.
Looking ahead, marketing consultancy WARC projects that Amazon's retail media ad revenue could exceed $67 billion this year and reach $79 billion by 2026. If Amazon Ads can sustain this momentum, it won't be long before advertising becomes a $100 billion business.
Where Amazon Ads goes from here
Amazon's advertising business may already be substantial, but it's still in the early stages of development.
The bedrock of Amazon Ads consists of sponsored ads tied to high-intent shopping behavior. As long as the e-commerce business continues to grow, the advertising business will also expand. However, Amazon is expanding well beyond its e-commerce product pages to other parts of its ecosystem.
One key growth driver is streaming. In 2024, Amazon introduced ads into Prime Video, instantly gaining access to more than 200 million viewers worldwide. Bank of America projects that Prime Video could generate $3.5 billion to $5 billion in ad revenue in 2025. Combine that with Twitch, Fire TV, and live sports, and Amazon could build one of the most valuable connected TV ad platforms in the market.
But Amazon isn't stopping there. Its new Retail Ad Service initiative opens up its ad technology to other retailers, turning internal tools into a software-as-a-service (SaaS) business. This is similar to how it extended its internal cloud computing expertise to external users, building the massive Amazon Web Services (AWS).
In other words, as more ad formats roll out and more advertisers join in, Amazon's ad flywheel will continue to spin, building a comprehensive advertising ecosystem that encompasses every part of the consumer journey.
What this means for investors
Amazon may be best known for its e-commerce and cloud computing businesses, but its advertising business is quickly becoming a significant force. If the momentum continues, ads could become one of Amazon's most valuable profit engines: high-margin, fast-growing, and deeply strategic.
If you're a long-term investor, this is a business segment worth watching closely, as it will affect your decisions about Amazon.
Should you invest $1,000 in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Bank of America is an advertising partner of Motley Fool Money. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Amazon Is Quietly Building a Massive Advertising Business

Key Points
The future of the auto industry lies in electric vehicles and ridesharing in autonomous vehicles.
After many years in service, Waymo still can't point to a timeline of profitability.
Tesla also faces challenges with its robotaxi offering, but it's well positioned, provided it can demonstrate safety and efficacy.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) isn't, strictly speaking, an electric vehicle (EV) company. However, its autonomous driving technology company, Waymo, is committed to only using EVs in its fleet. Funnily enough, it could be argued that Tesla (NASDAQ: TSLA) isn't really a pure EV company either. After all, most of its sky–high valuation is attributable to the potential of its robotaxis.
However, the comparison of these two as EV companies is valid because the future of the auto industry is EVs, and ridesharing in autonomous vehicles will be a larger part of the industry in the future. But which company is better placed, and which is the better stock?
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Alphabet vs. Tesla
It's entirely possible that Alphabet could decide to spin off Waymo, not least because it reportedly could be valued at more than $45 billion. Meanwhile, one of Tesla's biggest supporters, Cathie Wood's Ark Invest, ascribes 88% of Tesla's enterprise value (market cap plus net debt) to robotaxis in its investment case for the stock, producing an expected value of $2,600 for the stock in 2029.
As I have previously discussed, the Ark targets should be taken with a pinch of salt, as its track record on Tesla hasn't been good. However, Ark's core argument is sound and points to Tesla being potentially a far more valuable stock than Waymo ever will be.
Pathways to profitability
The core argument is that Tesla's business model is scalable to profitability while Waymo's is far less so. The issue of Waymo's profitability arose in a recent CNBC interview with Waymo co-CEO Tekedra Mawakana, where she was asked whether Waymo is profitable. She replied, "We're proving out that it can be a profitable business." When asked when Waymo would be profitable, she replied, "not clear."
It's also not clear if Alphabet/Waymo doesn't have an internal forecast for when it will hit profitability, or if Mawakana preferred not to divulge what the company considers an uncertain forecast. However, it's inconceivable that Alphabet is not internally crunching the numbers on this, and if it does decide to spin off Waymo, it's a question that needs to be answered.
The point here is that a business that can't be profitable isn't worth anything, let alone $45 billion, so at some point, its management is going to have to set some timelines.
Tesla and timelines
Whereas investors need to hear more about timelines from Waymo, whose public self-driving ride-hailing service was launched in 2018, there's probably a need for fewer declared timelines from Tesla, or, rather, a need for more accurate ones. For example, in 2019, CEO Elon Musk famously told investors to expect a million self-driving vehicles on the road by mid-2020. In April 2022, he also stated that Tesla aspired to reach volume production of a dedicated robotaxi (Cybercab) in 2024 -- a timeline that has now been pushed back to 2026.
These timeline estimates matter because plugging overly optimistic assumptions from them into valuation models can produce dramatically erroneous conclusions.
Why Tesla is better positioned
With all that said, Tesla has clear advantages over Waymo, provided it can demonstrate safety and reliability and achieve regulatory approvals. Its advantages include:
Lower vehicle costs, with Musk aiming for a $30,000 price tag for a dedicated robotaxi, the Cybercab. Meanwhile, Wall Street analysts estimate Waymo's current vehicles cost more than $120,000.
In addition, Tesla manufactures its own cars (Waymo does not), and existing Teslas can be converted into robotaxis using Tesla's as-yet-unreleased-to-the-public unsupervised full self-driving (FSD) software, giving Tesla a significant advantage in scaling the robotaxi business.
Tesla's use of camera-centric technology is inherently less expensive than Waymo's combination of cameras, light detection and ranging (Lidar) lasers, and high-definition maps.
Every Tesla car (robotaxi or not) on the road is effectively a data gatherer, with the data used to improve the AI that powers its AI models. As such, even though Waymo was first, Tesla has significantly more data than Waymo.
Which is the better EV stock?
Waymo may become profitable in the future, particularly if Lidar costs continue to drop. However, it's challenging to think that it will be a strong competitor to Tesla, provided Musk's company can master safe, unsupervised FSD using a camera-centric approach. That's a big "if" at this stage, but it becomes a smaller "if" as time goes by and Tesla expands its nascent robotaxi offering across new geographies. Tesla's next robotaxi launch is expected to be in Phoenix, as it plans to continue slowly building its robotaxi business. I think Tesla is the better EV stock when comparing Tesla and Alphabet.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Better EV Stock: Alphabet vs. Tesla (Hint: Robotaxis Are the Key)

Key Points
Nvidia's rampant growth continues to justify a higher stock price.
Alphabet's collective parts can drive the stock higher.
ASML's value has become too compelling to ignore.
Palantir Technologies (NASDAQ: PLTR) continues to rip higher, a fun and potentially life-changing ride for anyone who has bought and held over the past couple of years.
But buying the hottest stock on Wall Street only works until it doesn't -- nothing goes up forever. Palantir's valuation is at precarious heights, so investors looking to put new money to work may be better off looking to other artificial intelligence (AI) stocks.
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That doesn't mean sacrificing on quality. There are several companies at the cutting edge of the AI boom trading at reasonable valuations that stand to deliver outsize investment returns over the long term.
Here are three prime examples to consider. All three could have far more upside than Palantir at their current prices.
1. Nvidia's valuation remains reasonable despite a similar run
Investors looking for the market's top performers should look no further than Nvidia (NASDAQ: NVDA). The company's graphics processing units (GPUs) are the industry standard chips used in massive data centers to train and operate power-hungry AI models.
The stock has returned over 900% in the past three years, but the company's sales and earnings have largely kept pace with the share price, preventing the valuation from becoming too high.
Analysts expect the chipmaker to grow earnings by an average of 29% annually over the long term. The stock's current price-to-earnings ratio of 56 is still very reasonable for that growth. The business must still perform to those expectations, but the signs are encouraging.
Data center investments are poised to continue. McKinsey & Company is forecasting over $7 trillion in spending over the next five years, with more than $5 trillion of that allocated for processing AI loads.
And the government is easing its export restrictions on Nvidia, paving the way for the company to resume selling its H20 chips to China. It all bodes well for the stock.
2. Alphabet's recent rise can continue
Google's parent company, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), has been on a hot streak lately. Shares have risen about 15% over just the past month.
Concerns over regulatory threats and AI disruption to the company's core search engine business had weighed on the stock earlier this year. But Google Search revenue's 11.7% growth year over year in the second quarter of 2025 shows that the core business isn't done yet.
Barring drastic actions from regulators, it's doubtful that the Google ecosystem will disappear overnight. For now, investors can shift their attention to the positive developments at Alphabet, such as its progress in AI; surging cloud computing profits; and the steady expansion of Waymo, its autonomous ride-hailing service. It remains a juggernaut in the tech sector that few companies can match.
Lastly, the company's growth prospects look solid. Analysts have lowered their long-term estimates over the past year but still expect over 14% annualized earnings increases. At a price-to-earnings ratio (P/E) of just 21, there is still enough value here for the stock to continue building on its recent momentum.
3. ASML seems poised for a rebound
For all the excitement AI has generated among investors, ASML Holding (NASDAQ: ASML) struggled, with its stock tumbling 24% over the past year. The company is crucial to the AI landscape as the only one that builds extreme ultraviolet lithography (EUV) machines, which are essential for printing complex patterns on high-end microchips used for AI and in other cutting-edge applications.
ASML's headaches stem from the uncertainty of tariff policies. It disrupted its business, prompting management to issue a cautious outlook for next year, despite posting a strong second quarter. It now trades at a P/E of 26, a valuation rarely this low over the past 10 years.
The stock's decline could be an excellent buying opportunity. Taiwan Semiconductor Manufacturing's recent strong quarter highlights the ongoing demand for AI chips, and analysts still expect ASML to grow its earnings by an average of 17% annually over the long term. In other words, tariffs may delay spending on the company's equipment in some cases, but they are unlikely to stop it. Look for a rebound once the tariff situation becomes clearer.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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