Alphabet Inc, Google’s parent company, reported better-than-expected Q2 results, with double-digit revenue growth in key segments like Search, YouTube, Google Cloud, and subscription platforms. Despite strong fundamentals, legal challenges and competition have kept GOOGL stock underperforming. However, its AI strategy shows promise for future growth.

Alphabet’s end-to-end AI approach is driving user engagement and revenue growth. AI is transforming Google Search, leading to increased search volumes and user interactions. Features like AI Overviews and the Gemini app are enhancing engagement, with Google Search generating $54.2 billion in Q2 revenue, a 12% increase year-over-year.

Google Cloud is experiencing stellar growth, with revenues up 32% to $13.6 billion in Q2. Deals over $250 million doubled year-over-year, and new customer growth for GCP surged nearly 28%. Alphabet plans to increase capital expenditures to $85 billion in 2025 to meet the demand for AI capabilities and cloud services.

YouTube saw advertising revenues grow 13% to $9.8 billion in Q2, driven by rising engagement in advertising and subscription services. Shorts, YouTube Premium, and Google One are attracting strong subscriber bases. With AI driving growth across its businesses, Alphabet is poised to reach a $3 trillion market cap.

Alphabet’s valuation is attractive, trading at a lower P/E and P/S ratio compared to peers like Microsoft, Apple, and Amazon. Analysts maintain a “Strong Buy” rating for GOOGL stock, with a high price target of $250, suggesting over 31% upside potential. Alphabet’s strong earnings, AI investments, and valuation make it a compelling long-term investment.

Read more at Yahoo Finance: AI Is Alphabet’s Rocket to a $3 Trillion Valuation. Is GOOGL Stock a Buy Here?