Alphabet’s GOOGL Google Services segment revenues are benefiting from higher advertising revenues that benefited from growth in revenues from Search and YouTube ads. GOOGL is advancing visual and contextual search capabilities, and AI Overviews now reach more than 2 billion users per month and are available in over 200 countries across 40 languages. AI is helping improve recommendations and auto dubbing on YouTube, which is expanding the target audience for creators and brands.
Alphabet’s strategy of infusing AI-powered features on a continuous basis is attracting users. GOOGL recently unveiled a new image editing model from Google DeepMind in the Gemini app. Alphabet has been updating Gemini Live with new languages and countries. The latest updates allow Gemini to provide visual guidance by highlighting things directly on a user’s screen. Gemini can now connect apps that are used on a daily basis, like Google Calendar, Google Tasks, Google Keep, among others.
Gemini now leverages its advanced reasoning and multimodal capabilities to translate in real time. Alphabet’s advanced AI models currently support more than 70 languages, including Arabic, French, Hindi, Korean, Spanish and Tamil, for live conversation.
These new developments are expected to drive Google Services segment revenues that increased 11.7% year over year to $82.54 billion and accounted for 85.6% of second-quarter 2025 total revenues. The Zacks Consensus Estimate for third-quarter 2025 Google Services revenues is pegged at $84.51 billion, indicating 10.5% growth from the figure reported in the year-ago quarter.
GOOGL Faces Tough Competition
Alphabet is facing stiff competition from the likes of Apple AAPL and Microsoft MSFT in the AI-powered services domain.
Apple is benefiting from the growing adoption of Apple Intelligence that is infused across iPhone, Mac, and iPad. In April, Apple expanded the availability of Apple Intelligence with iOS 18.4, iPadOS 18.4, and macOS Sequoia 15.4 updates in new languages, including French, German, Italian, Portuguese (Brazil), Spanish, Japanese, Korean, and Chinese (simplified), as well as localized English for Singapore and India. At the end of 2025, Apple Intelligence will be available in eight more languages: Danish, Dutch, Norwegian, Portuguese, Swedish, Turkish, Chinese (traditional) and Vietnamese.
Microsoft is keeping no stone unturned to improve the capabilities of Bing, its search engine. MSFT has been integrating AI into Bing thanks to its partnership with OpenAI. Microsoft introduced Copilot Search in Bing in April this year and launched Bing Video Creator in June. Tools like Azure OpenAI, Microsoft 365 Copilot and GitHub Copilot are becoming integral for enterprises looking to embed Generative AI into their workflows. Microsoft has integrated OpenAI’s GPT-5 across Microsoft 365, GitHub, Visual Studio and Azure AI Foundry, enabling smarter reasoning, real-time model routing and advanced coding.
GOOGL’s Share Price Performance, Valuation & Estimates
Alphabet shares have appreciated 12.4% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 12.9%.
GOOGL Stock’s Performance
Image Source: Zacks Investment Research
The GOOGL stock is trading at a premium, with a forward 12-month price/sales of 7.12X compared with the broader sector’s 6.66X. Alphabet has a Value Score of F.
GOOGL Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings is pegged at $10 per share, up 2.8% over the past 30 days, suggesting 24.4% growth from fiscal 2024’s reported figure.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
