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.

Alphabet Inc. (GOOG) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Over the past month, shares of this company have returned +11.8%, compared to the Zacks S&P 500 composite's -1.7% change. During this period, the Zacks Internet - Services industry, which Alphabet falls in, has gained 10.7%. The key question now is: What could be the stock's future direction?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Earnings Estimate Revisions
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Alphabet is expected to post earnings of $2.12 per share, indicating a change of +29.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
For the current fiscal year, the consensus earnings estimate of $8.02 points to a change of +38.3% from the prior year. Over the last 30 days, this estimate has changed -0.1%.
For the next fiscal year, the consensus earnings estimate of $8.92 indicates a change of +11.2% from what Alphabet is expected to report a year ago. Over the past month, the estimate has changed -0.1%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Alphabet is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue Growth
Even though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Alphabet, the consensus sales estimate of $81.41 billion for the current quarter points to a year-over-year change of +12.6%. The $294.82 billion and $330.39 billion estimates for the current and next fiscal years indicate changes of +14.9% and +12.1%, respectively.
Last Reported Results and Surprise History
Alphabet reported revenues of $74.55 billion in the last reported quarter, representing a year-over-year change of +16.4%. EPS of $2.12 for the same period compares with $1.55 a year ago.
Compared to the Zacks Consensus Estimate of $72.85 billion, the reported revenues represent a surprise of +2.34%. The EPS surprise was +15.85%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.
Valuation
Without considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Alphabet is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Conclusion
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Alphabet. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
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Is Most-Watched Stock Alphabet Inc. (GOOG) Worth Betting on Now?

Key Points
The rise of ChatGPT forced investors to ponder the future of Google Search and, by extension, Alphabet's ad-driven business model.
Alphabet continues to diversify its revenue sources.
Alphabet has the lowest P/E ratio of the "Magnificent Seven."
The introduction of ChatGPT appears to have dramatically changed perceptions regarding Google's parent company, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). Thanks to the dominance of Google Search, Alphabet had become a digital-advertising powerhouse. However, as more users turned to ChatGPT, Google Search's market share fell below 90%, leading to questions about the company's future.
Upon closer inspection, investors have good reason to continue to believe in Alphabet stock, regardless of its competitive position with regard to ChatGPT. Here's why Alphabet could experience considerable growth over the next five years.
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Alphabet's evolution
Alphabet has long relied on digital advertising for the majority of its revenue. Although the company has gradually diversified, advertising still accounted for 74% of the company's revenue in the first half of the year.
The concerns about its revenue model are valid. Alphabet derives revenue by driving traffic to websites displayed through its search engine and other avenues, such as its YouTube streaming service.
ChatGPT provides information to users without directing them to a website, which could potentially deprive ChatGPT of the ability to generate revenue. Additionally, since Google Search utilizes ChatGPT peer Google Gemini to accomplish the same task, Google Search could potentially drive less revenue, as searches would lead users to advertised websites less often.
Nonetheless, with a nearly 90% market share, Google Search has remained remarkably sticky. Also, YouTube, with an ad-driven model that remains solid, has become one of the most popular streaming channels. That may pose a competitive threat to streaming giants like Netflix.
Alphabet has long sought to diversify its revenue sources and, to that end, it owns numerous non-ad businesses. The most prominent of those is Google Cloud, which made up 14% of the company's revenue in the first half of 2025, up from 12% in the same year-ago period.
Investors should also take note of Waymo, despite it not appearing in Alphabet's financials. A fundraising round recently valued Waymo at $45 billion, and partnerships with Uber and automakers such as Toyota and Hyundai have made it increasingly essential to the automotive industry.
As Waymo and other Alphabet-owned industries become larger revenue drivers, it should reduce the company's dependence on ad revenue. That should mitigate the damage that ChatGPT could do to its business model.
Alphabet by the numbers
Alphabet's financial position suggests that concerns about the state of its business model haven't stopped the company's growth. In the first half of 2025, it generated $187 billion in revenue, a 13% rise from the first two quarters of 2024. Costs and expenses grew more slowly, and gains from interest and equity securities resulted in $63 billion in net income during the year's first half, a 33% yearly increase.
Despite pledging to spend $75 billion in capital expenditures (capex) in 2025, the company continues to hold $95 billion in liquidity, giving it one of the strongest balance sheets in the market. Furthermore, Alphabet generated almost $67 billion in free cash flow over the previous 12 months, a figure that excludes capex. That gives the Google parent tremendous optionality, allowing it to invest in its business or return cash to shareholders in the form of dividends or share repurchases.
Amid concerns about the company, the stock underperformed the S&P 500 over the last year. Still, the stock has risen by more than 30% from its April lows.
The stock's price-to-earnings ratio (P/E) stands at 21. That not only makes it the lowest-cost stock in the "Magnificent Seven" but also makes it remarkably inexpensive, considering its continued growth.
Alphabet is an underrated stock
Alphabet's low valuation and business model could position it for significant growth between now and 2030. One can find reasons to doubt the company's business model if Google Search leads fewer users to sites, but with 74% of revenue still coming from digital ads, the growth trajectory of that business remains in question.
Nonetheless, Alphabet's massive liquidity and free cash flow give it a tremendous ability to foster other businesses while rewarding shareholders. As Google Cloud, Waymo, and other enterprises contribute a larger share of the company's revenue, Alphabet is likely to prosper over the next five years, and a low P/E ratio suggests an underappreciated opportunity.
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Will Healy has positions in Uber Technologies. The Motley Fool has positions in and recommends Alphabet, Netflix, and Uber Technologies. 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.

This Underrated AI Stock Could Deliver Huge Returns by 2030

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.
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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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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!*
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
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!*
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
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.

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