From Yahoo Finance: 2025-05-07 11:51:00

Alphabet Inc. (GOOG) is trading at $162.42 with a P/E ratio of 18.13. Despite a strong Q1 performance, the stock barely moved due to cautionary remarks on Q2 and concerns about $75 billion in CapEx for AI data centers and compute by 2025. YouTube subscription growth is outpacing ad revenue, indicating a shift towards recurring, high-margin revenue streams. Google Cloud is seeing significant growth, reaching a $50 billion annual run rate with operating margins at 18%. Google’s AI strategy is showing promise, with Gemini 2.5 embedded across major products and driving internal productivity gains. The aggressive $75 billion CapEx spend on AI infrastructure is expected to boost depreciation and pressure GAAP margins in the near term, but will likely lead to long-term competitive advantages. Hedge funds are increasingly bullish on GOOG, with 174 portfolios holding the stock at the end of Q4. Despite the risks, investing in AI stocks like GOOG could potentially lead to higher returns within a shorter timeframe.

Read more: Alphabet Inc. (GOOG): A Bull Case Theory