Alphabet (NASDAQ: GOOG, GOOGL) could either be bottoming out, or it could crater more on April 24, 2025, as it is reporting its Q1 2025 earnings. It’s a good idea to look at the expectations here, since the stock could finally turn a corner after being a laggard for so long.
Analysts expect Q1 results to reflect early returns on Alphabet’s $75 billion AI infrastructure spend. Google seems to have taken the lead in AI with its Gemini 2.5 Pro model, and usage has been surging.
Cloud revenue is also forecast to rise 17% year-over-year to $55 billion in 2025. Margins are expected to be around 17.4%. This segment alone could offset any slower ad growth. I’m a bit worried about the advertising segment here since global digital ad growth is slowing to 3.6% this year.
If the ads don’t slow down as much and both cloud + AI keep outperforming, this could easily lead to a rally for GOOG.
Alphabet faces risks from US-China tech tariffs impacting APAC cloud and ad revenue. The longer the trade war goes on, the worse it is for almost every tech company.
There’s also a U.S. court ruling that deemed Google’s ad tech practices monopolistic. A breakup is very unlikely, but that’s a risk nonetheless. And if ad growth does slow down and cloud doesn’t offset it, GOOG stock is likely to keep tumbling down. Wall Street expects around $89 billion in revenue and $2 in EPS for Q1. Alphabet missed revenue estimates by 0.19% in Q4 2024.
