Alphabet GOOGL is infusing artificial intelligence (AI) heavily across its offerings, including Search and Google Cloud, driving top-line growth. GOOGL dominates the digital advertising and search domains that generate significant advertising revenues, hitting $264.59 billion in 2024. Google Cloud revenues surged 30% year over year to $12 billion in 2024, driven by core cloud products, AI infrastructure, and Generative AI (GenAI) tools like Vertex AI and Gemini. GOOGL’s plan to buy Wiz for a whopping $32 billion will enhance Google Cloud’s security offerings, driving further growth.
Meanwhile, Alphabet’s autonomous driving platform, Waymo, is now expanding to Japan in collaboration with GO, a leading Japanese taxi platform, and Nihon Kotsu, Tokyo’s largest taxi company. The Waymo service is already available in Phoenix, San Francisco, and Los Angeles, with more than four million fully autonomous rides in 2024 alone. GOOGL is expanding Waymo services to Austin and Atlanta on the Uber app this year. In partnership with Moove, Waymo will be available to Miami in 2026. Waymo One app will be available to Washington D.C. riders in 2026.
Will these factors drive Alphabet’s prospects this year? Alphabet shares have declined 16% year to date due to challenging macroeconomic conditions post U.S. President Donald Trump’s decision to levy tariffs on trade partners, including China, Mexico and Canada. Sluggish cloud growth and higher investments on developing cloud infrastructure is a headwind for Alphabet stock.
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GOOGL is suffering from a lack of capacity, and until new capacity comes online in 2025, cloud revenues are expected to see increased variability. The company expects to invest roughly $75 billion in capital expenditures in 2025, which is aimed at building up technical infrastructure, primarily for servers, followed by data centers and networking.
So, what should investors do with GOOGL stock? Let’s find out.
At its Cloud Next 2025 conference in Las Vegas, GOOGL unveiled Ironwood, its seventh-generation Tensor Processing Unit (TPU), expected to be available later this year. Google Cloud unveiled its Cloud Wide Area Network (Cloud WAN), giving enterprises access to its private global fiber network. Alphabet showcased Willow, its new quantum chip while on the AI model front, Alphabet launched Gemini 2.5, its most advanced reasoning model, alongside Gemini 2.5 Flash, a low-latency, cost-efficient version tailored for developers.
Alphabet’s initiatives to deploy AI and infuse AI in Search are expected to drive top-line growth. Circle to Search is driving additional Search and is gaining popularity among younger users. Vertex usage increased 20 times in 2024, with strong developer adoption of Gemini Flash, Gemini 2.0, Imagen 3 and Veo. GOOGL recently launched Gemma 3, a collection of lightweight, state-of-the-art open models that can run on a single GPU or TPU.
Meanwhile, the Google-Wiz combination will offer security offerings that are supported on multi-cloud and are expected to tackle threats emerging from the advancement of AI, prevent breaches and help enterprises respond to breaches more efficiently. Wiz has a stellar clientele with its cloud security platform currently used by Amazon AMZN, Microsoft MSFT and Oracle ORCL.
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