Thinking about investing in Alphabet (GOOG)? Let’s break it down in simple terms so you can decide whether it’s a good move or not!
1. Alphabet’s Stock Dropped – But Why?
Alphabet just released its earnings report, and while its earnings per share (EPS) beat expectations ($2.15 vs. $2.13), Google Cloud revenue fell short ($11.9 billion vs. the expected $12.1 billion). This disappointed investors, causing the stock to drop.
On top of that, Alphabet is ramping up its capital expenditures (capex) from $57.9 billion to $75 billion, mainly to invest in AI and infrastructure. While this could pay off in the long run, it might hurt short-term profits, which is something investors don’t always like.
2. Tough Competition in Cloud & AI
Google Cloud is still trailing behind Amazon AWS and Microsoft Azure. Microsoft’s cloud revenue grew 21%, though slightly below Wall Street expectations. This means Alphabet still has a lot of work to do if it wants to catch up in the cloud business.
But here’s the interesting part—CEO Sundar Pichai is actually optimistic about AI. He believes that as AI becomes cheaper, more people will use Google’s services. So instead of seeing DeepSeek (a Chinese AI competitor) as a threat, Alphabet sees it as an opportunity to expand its business.
3. Risks & Challenges
Aside from missing cloud revenue targets, Alphabet is also dealing with:
- Regulation issues – China is launching an antitrust probe against Google, and in the U.S., there are talks about breaking up the company to reduce its market dominance.
- Competition – DeepSeek’s AI models are making waves because they’re cheaper and just as powerful as top U.S. models. If this trend continues, Alphabet’s dominance in AI could be at risk.
- Market uncertainty – Tech stocks are volatile, and with ongoing TikTok policies and global economic shifts, Alphabet’s stock could continue to fluctuate.
4. So, Should You Invest in Alphabet?
- Long-term potential → Alphabet is still a powerhouse in tech. AI and cloud computing are key to its future growth. If you’re a long-term investor and believe in AI, this stock could be a great opportunity.
- Short-term risks → The stock is dropping due to cloud revenue concerns and regulatory issues. If you’re looking for quick gains, you might want to be cautious or wait for more stability.
- Financial health → Alphabet remains financially strong. Its advertising revenue is solid, and its big AI investments could be game-changers in the future.
If you’re a long-term investor who believes in AI’s future, Alphabet could be a solid buy. But if you’re not comfortable with volatility and regulatory risks, you might want to wait until things settle down. So, what do you think? Ready to buy now or wait for a better entry point?