Despite the overall macroeconomic uncertainty caused by global trade tensions, companies that provide artificial intelligence (AI) and cloud services continue to grow rapidly. Alphabet (GOOGL), Google’s parent company, reported strong quarterly results that revealed financial strength and a clear path to leadership in AI, cloud services, and digital content. 

Following the strong first-quarter results, GOOGL stock began to recover. However, the stock is still down 15.7% year to date, while the Nasdaq Composite Index ($NASX) has fallen 8.1%. This could be a great time to buy this “Strong Buy”-rated AI stock on a dip.

AI Driving Strong Growth Across Alphabet’s Ecosystem

Alphabet reported a stellar quarter, with AI serving as a key driver of Google’s strong business momentum across Search, Cloud, and YouTube. 

Total revenue rose 12% to $90.2 billion, while adjusted earnings per share soared 49% to $2.81. Both revenue and earnings exceeded consensus expectations. AI continues to propel Google’s advertising business, accounting for $66.8 billion in total revenue. The quarter marked the rollout of Gemini 2.5, the company’s most advanced AI model yet. During the Q1 earnings call, CEO Sundar Pichai stated that Gemini 2.5 Pro now powers AI features throughout Google’s product suite. Furthermore, the company introduced a lighter variant, Gemini 2.5 Flash, which allows developers to balance performance and cost.

Search remains Google’s flagship product and largest revenue generator, with AI Overviews now serving over 1.5 billion users per month. Search revenue increased 9.9% to $50.7 billion in the quarter, with strong contributions from financial services (particularly insurance) and retail. AI Overviews expanded into over 140 countries and 15 languages, marking its largest rollout to date. Additionally, visual search features such as Lens and Circle to Search experienced rapid growth.

Aside from Search, Google Cloud contributes significantly to total revenue. Cloud revenue rose 29.5% to $12.3 billion. According to management, Google’s generative AI models, such as “Gemini 2.5, Imagen 3, Veo 2, and open-source options like Llama 4 and Anthropic,” boosted Cloud’s growth in the quarter. Gemini models are now integrated into all of Google’s top 15 products, each of which has over half a billion users.

Management emphasized that Google Cloud was the first to offer Nvidia’s (NVDA) latest B200 and GB200 Blackwell GPUs, with plans to support the upcoming next-generation Vera Rubin GPUs. Furthermore, Google’s intent to acquire Wiz, a multi-cloud security leader, for $32 billion in an all-cash transaction, demonstrates the company’s emphasis on enterprise safety in the AI era. Google’s subscription business surpassed 270 million paid subscribers, with YouTube Premium and Google One being the primary drivers. YouTube celebrated its 20th anniversary and continues to dominate the streaming market. According to Nielsen data, YouTube has been the most popular streaming platform in the U.S. for the past two years. The platform now has more than a billion monthly podcast listeners. 
Aside from its core segments, Alphabet’s self-driving unit, Waymo, is rapidly growing. The service now completes more than 250,000 paid passenger trips per week, a fivefold increase from the previous year. Despite its continued investments in AI, Alphabet’s balance sheet remains strong. At the end of the quarter, it had $95.6 billion in cash, cash equivalents, and marketable securities, as well as $74.9 billion in free cash flow for the trailing 12 months. This hefty free cash flow balance enabled the company to pay out $2.4 billion in dividends and repurchase shares worth $15.1 billion. 

Alphabet also announced a 5% increase in its quarterly dividend, to $0.21 per share. While the 0.53% yield is unappealing, a forward payout ratio of 8.2% provides plenty of room for dividend growth.

Analysts expect full-year revenue to increase by 10.7%, followed by an 18.8% increase in earnings. 

Is GOOGL Stock a Buy, Hold, or Sell on Wall Street?

Following the Q1 results, Tigress Financial analyst Ivan Feinseth maintained a bullish outlook for GOOGL stock, reiterating a price target of $240. Feinseth believes that with AI driving growth in digital advertising and cloud services, Alphabet is well-positioned to increase revenue and cash flow. He added that Alphabet, which has a strong balance sheet, continues to invest in future growth while rewarding shareholders with ongoing buybacks. Bank of America Securities and JPMorgan analysts maintained similar stances with price targets of $200 and $195, respectively.

Overall, on Wall Street, GOOGL stock is a “Strong Buy.” Of the 52 analysts covering the stock, 41 rate it a “Strong Buy,” three say it is a “Moderate Buy,” and eight rate it a “Hold.” The average target price of $200.75 implies the stock can rise by 26% from current levels. Plus, its high price estimate of $240 suggests the stock has upside potential of 50% over the next 12 months.

The Bottom Line on GOOGL Stock 

Alphabet’s Q1 results show how its multi-year investments in AI and infrastructure are paying off across all segments, including Search, Cloud, YouTube, and Waymo. With AI now deeply integrated into both consumer and enterprise products and continued monetization strength in Search and Ads, the company is poised for even greater growth in 2025 and beyond. At 16.6x forward earnings, Alphabet remains an excellent long-term AI investment.