https://lojoolodo24.blogspot.com/2025/06/why-is-alphabet-googl-google-lagging.html
In a previous post, we explored the reasons behind Alphabet’s (GOOGL, Google) sluggish stock performance. So, how did Google's latest earnings fare? Is this an undervalued stock with strong fundamentals, or is it struggling to adapt to industry changes?
Google’s Business Segments
Google's business is mainly divided into Google Services (advertising, subscriptions & platforms, devices) and Google Cloud. While search and YouTube remain the core of its advertising business, subscription and platform revenue are growing. Cloud services, fueled by AI, are expanding rapidly but face fierce competition.
1. Google Services: Advertising, Subscriptions & Platforms, Devices
Google Advertising
- Google Search & Others: Revenue from Google Search, Gmail, Maps, Google Play, and affiliated search partners
- YouTube Ads: Ad revenue generated from the YouTube platform
- Google Network Ads: Revenue from external websites using AdMob, AdSense, Google Ad Manager
Google Subscriptions, Platforms & Devices
- Consumer subscriptions: YouTube TV, YouTube Music & Premium, NFL Sunday Ticket, Google One
- Platforms: Revenue from app purchases and in-app transactions via Google Play
- Devices: Sales of Pixel smartphones, tablets, and other hardware
2. Google Cloud
- Google Cloud Platform (GCP): AI infrastructure, Vertex AI, Gemini for Google Cloud, cybersecurity, and data analytics
- Google Workspace: Gmail, Calendar, Docs, Drive, Meet (including Gemini for Google Workspace)
- Other enterprise services
Google’s Q1 2025 Earnings: Strong Performance in Both Google Services & Google Cloud
Revenue & Operating Income (in million USD)
| Category | Q1 2024 | Q1 2025 | YoY Growth (%) |
|---|---|---|---|
| Revenue | |||
| Google Services | 70,398 | 77,264 | 9.8% |
| Google Cloud | 9,574 | 12,260 | 28.0% |
| Other Businesses | 495 | 450 | -9.1% |
| Hedging Gains/Losses | 72 | 260 | 261.1% |
| Total Revenue | 80,539 | 90,234 | 12.0% |
| Operating Income | |||
| Google Services | 27,897 | 32,682 | 17.2% |
| Google Cloud | 900 | 2,177 | 141.9% |
| Other Businesses | -1,020 | -1,226 | -20.2% |
| Alphabet-Level Activities | -2,305 | -3,027 | -31.3% |
| Total Operating Income | 25,472 | 30,606 | 20.1% |
Revenue Breakdown (in million USD)
| Category | Q1 2024 | Q1 2025 | YoY Growth (%) |
|---|---|---|---|
| Google Search & Others | 46,156 | 50,702 | 9.9% |
| YouTube Ads | 8,090 | 8,927 | 10.4% |
| Google Network Ads | 7,413 | 7,256 | -2.1% |
| Total Google Ads | 61,659 | 66,885 | 8.5% |
| Google Subscriptions, Platforms & Devices | 8,739 | 10,379 | 18.8% |
| Google Services Total | 70,398 | 77,264 | 9.8% |
| Google Cloud | 9,574 | 12,260 | 28.0% |
| Total Revenue | 80,539 | 90,234 | 12.0% |
Google's Q1 2025 revenue grew 12.0% YoY to $90.2 billion. Google Services and Google Cloud saw revenue increases of 9.8% and 28.0%, respectively, with operating income also rising. Notably, Google Cloud’s operating income surged 141.9% YoY, yet its contribution to overall profitability remains modest at 7.1%.
Revenue from Google Search & YouTube Ads continued to rise, supporting Alphabet’s overall earnings. However, Google Network Ads showed a decline, and other ventures (Waymo, Verily, etc.) continued to generate losses.
Conclusion
Google remains a dominant global platform, but AI-driven industry shifts, cloud growth trajectory, and changes in search engine dominance create short-term uncertainties. The stock's recent underperformance is unlikely to be resolved quickly.
For Q2 earnings (July 29), key areas to watch include Google Cloud’s growth rate, AI investments, ad market share, and revenue trends.
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