Alphabet Is A Massive Cash Flow Machine With An Under-Leveraged Balance Sheet: Analyst
Alphabet reported fourth-quarter net sales of $96.47 billion, up 11.8%, but this fell short of the consensus estimate of $96.56–$96.69 billion. GAAP EPS reached $2.15, topping the consensus of $2.12–$2.13.
Google's New AI Travel Features Could Drive Major Growth In Search Volume: Analyst
Cloud revenue of $11.96 billion grew 30% but underperformed the $12.19 billion consensus, with growth slowing from the third quarter's 35%. Operating profit hit $2.15 billion (18% margin), beating the $1.9 billion estimate, but the revenue miss raised concerns about Alphabet trailing AWS and Azure.
Search represents one of the actual utilities of the Internet economy, and Alphabet has expertly dominated the sector for nearly twenty-five years.
The company has levered this enviable position into numerous other growth areas, notably video streaming (YouTube) and Infrastructure-as-a-Service (Google Cloud Platform). Alphabet is a massive cash flow machine with an under-leveraged balance sheet.
With EBITDA margins of 35-40%, Alphabet ended 2024 generating over $70 billion in free cash flow and amassed a net cash balance of ~$85 billion; Shauger noted Alphabet is well positioned to pursue emerging areas of growth, particularly AI.
Slowing growth at GCP has led to concerns about the trajectory of this critical segment.
After reporting 23% growth in its third quarter of 2023, GCP subsequently accelerated over the next several quarters, peaking at 35% in the third quarter of 2024 before slipping to 30% in the fourth quarter of 2024. Despite indications of demand outstripping supply, Shauger noted this dent in acceleration has raised concerns about the near-term trajectory of this strategically important segment.
Although Alphabet offers relatively little in the way of guidance, on its fourth-quarter call, it did announce initial 2025 cap-ex guidance of $75 billion, representing ~ a 35% increase over 2024 and 150% from 2023.
Shauger stated this, coupled with slowing GCP has stoked concerns among some investors. Upcoming remedy trial could prove pivotal.
After ruling in mid-2024 that Alphabet maintained an illegal monopoly in search, the Department of Justice (DOJ) subsequently proposed various remedies, some potentially quite disruptive.
Shauger noted that the trial, set for April of this year, could give investors some measure of the impact of the company and its shares.
Shauger projected first-quarter revenue of $90.23 billion and GAAP EPS of $2.06.
Price Action: GOOG stock is up 1.06% at $157.88 at the last check on Tuesday.
Read Next:Image via Shutterstock
Date
Firm
Action
From
To
Feb 2022
MKM Partners
Maintains
Buy
Feb 2022
Mizuho
Maintains
Buy
Feb 2022
Piper Sandler
Maintains
Overweight
View More Analyst Ratings for GOOGL
View the Latest Analyst Ratings
UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets.
Get the latest stock analysis from Benzinga?
ALPHABET (GOOGL): Free Stock Analysis Report
This article Alphabet Is A Massive Cash Flow Machine With An Under-Leveraged Balance Sheet: Analyst originally appeared on Benzinga.com
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
33 minutes ago
- Business Insider
YouTube's cofounder said he's wary of his kids spending too much time on short videos
YouTube's cofounder and former tech chief says he doesn't want his kids to watch only short videos on platforms like TikTok, Reels, and Shorts. "I don't know if I want my kids to be watching like short-form content as their only way, and they can't be able to watch something that's more than 15 minutes in length," said Steve Chen in a talk with Stanford Business School that was published on Friday. "I think TikTok is entertainment, but it's purely entertainment," Chen, a father of two, said. "It's just for that moment. Just shorter form content equates to shorter attention spans." Chen cofounded YouTube in 2005 with colleagues he met at PayPal. He served as chief technology officer before they sold the video platform to Google in 2006. The entrepreneur has since launched several other businesses and moved to Taiwan with his family in 2019. During the talk, Chen said he knows parents who are forcing their children to watch long-form content and not showing them videos with vibrant colors and "addictive eyeballs" because these are known to get kids hooked. Chen suggested that platforms restrict the amount of time the apps can be accessed on a daily basis, based on different age groups. "There's this delicate balance between what is going to get users' eyes and what's going to monetize more versus what is actually useful," he said about short-form content platforms. Chen did not immediately respond to a request for comment. Chen's worries echo recent remarks from Sam Altman about social media. On a podcast that aired last week, the OpenAI CEO — and new father — said he worries about the psychological impact social media platforms could have on children. "I do have worries about kids in technology. I think this short video feed dopamine hit, it feels like it's probably messing with kids' brain development in a super deep way," he said. Academics are warning about children and scrolling, too. Jonathan Haidt, a professor at the NYU Stern School of Business, told BI in January that social media apps were "severely damaging children in the Western world." Haidt wrote "The Anxious Generation," in which he argued that social media and smartphones shorten young people's attention spans. "The decimation of human attention around the world might even be a bigger cost to humanity than the mental health and mental illness epidemic," Haidt said.
Digital Trends
4 hours ago
- Digital Trends
Watch the Galaxy Z Fold 7 do something amazing in this brutal bend test
Samsung's Galaxy Z Fold 7 became available to buy on Friday, which meant that it also became available for popular tech YouTuber Zack Nelson to subject the handset to his nasty durability test. Nelson set it up nicely by noting the 'fun fact' that none of the phones in Samsung's flagship Fold series have ever snapped in two in the bending part of his durability test. 'However, this new guy, the Samsung Galaxy Z Fold 7, is the thinnest Fold yet, so here's to hoping that it finally happens today,' he quips. At the start of the test, the YouTuber (of the channel JerryRigEverything) comments on how gorgeous the Galaxy Z Fold 7 looks. But of course, by the end of the test, the handset is an utter wreck. As is usual with his infamous durability test, Nelson sets to work with various pointy metal tools to test the susceptibility of the $2,000 foldable handset to scratches and other damage. What quickly becomes apparent is that that the Z Fold 7's inner display is as delicate as its predecessors, scratching as it does at a low Mohs hardness level of just 2. While the phone is not dust-resistant, it does have an IP48 rating, meaning that it offers protection against solid objects larger than 1 mm, a fact that prompts Nelson to dump a handful of grit on the inner display before closing it shut. Yes, you will wince. Then comes the bend test. 'The thinness of this phone is wild,' Nelson says of the 4.2mm-when-open design, at the same time suggesting that the device in his hand will not survive 'for more than a few minutes' as Samsung has 'finally gone too far.' The YouTuber then sets about enthusiastically bending it in the direction in which it most definitely should not be bent. For a moment, the phone looks done for. But then, with all of Nelson's brut force applied, the Galaxy Z Fold 7 does something amazing: It remains intact. 'I'm literally flexing the rear glass panel out of the frame without the glass cracking, without the phone cracking, and without the hinge cracking — literal black magic,' Nelson says, adding: 'The Fold 7 is still able to fold completely shut and is still 100% operational.' It's highly impressive, with the YouTuber quipping that his 'disappointment is immeasurable.' Want to find out more about Samsung's Galaxy Z Fold 7? Then check out Digital Trends' hands-on review.
Yahoo
6 hours ago
- Yahoo
Analysts turn heads with new Alphabet stock price target after earnings
Analysts turn heads with new Alphabet stock price target after earnings originally appeared on TheStreet. Alphabet's solid earnings have investors feeling more confident in Google again. The company posted earnings of $2.31 per share on revenue of $96.43 billion, both ahead of Wall Street analysts' forecast. Search brought in $54.19 billion, while total ad revenue climbed to $71.34 billion, up 10% from last year. YouTube ads came in at $9.8 billion, slightly above expectations. Cloud was a standout, with revenue jumping 32% to $13.62 billion. Alphabet recently struck a deal with OpenAI to power ChatGPT using Google Cloud. Alphabet also raised its 2025 capital spending forecast to $85 billion, up from $75 billion in February, citing 'strong and growing demand for our Cloud products and services.' CFO Anat Ashkenazi said spending will likely increase again in 2026. The upbeat report helped push Alphabet stock () closer to its all-time high. Shares closed at $194.08 on July 25, up more than 13% over the past month. That mirrors a broader bounce in tech stocks as optimism grows around AI and cloud. So far this year, however, Alphabet shares are still trailing the market, up just 1.91% compared to the S&P 500's 8.62% gain. Analysts raise Alphabet's stock price targets Alphabet's latest earnings beat has prompted a wave of price target hikes from Wall Street analysts, though opinions split on how much upside is left. Bank of America analyst Justin Post raised his price target on Alphabet to $217 from $210 while maintaining a buy rating, following the company's better-than-expected second-quarter analyst highlighted that both Cloud and Search outperformed expectations, calling them 'a bright spot' in what he described as 'another strong' quarter that suggests AI use is growing the market. "Another stable qtr for Search results increases our confidence in the AI transition and should ease concerns on a potential revenue reset," the analyst wrote. "We acknowledge growing users of OpenAI but think Street could be underappreciating potential AI driven upside for Search (more use, better ads) and Cloud," he added. JPMorgan raised its price target on Alphabet to $232 from $200 and reiterated an overweight rating, according to The firm believes Alphabet's AI-driven demand and accelerating backlog make Google Cloud a "bigger driver of the bull case going forward." Other firms also lifted their targets following the earnings beat, though with a more cautious tone. Stifel raised its price target on Alphabet to $222 from $218, citing solid performance across Search, YouTube, and Cloud. However, the firm doesn't expect much follow-through in shares due to lingering concerns about Alphabet's long-term AI position and the DOJ overhang. UBS bumped its target to $202 from $192, calling the quarter Alphabet's 'cleanest' in a while, with strong fundamentals supporting earnings growth. Still, the firm kept a neutral rating, pointing to pressure on the stock's valuation from unresolved regulatory risks and rising competition in Search. Google still faces pressure Despite Alphabet's strong earnings, concerns around regulatory and competitive threats still exist. The company is currently facing a major antitrust lawsuit from the U.S. Department of Justice. In early August 2024, Judge Amit Mehta of the U.S. District Court for the District of Columbia accused Google of illegally maintaining a search engine monopoly by using exclusive agreements with device makers like Apple () .The DOJ is now pursuing remedies that include forced divestitures of Chrome and Android. The case is still pending, but could lead to structural changes or costly settlements if the DOJ prevails. Mehta said he aims to rule by August, Reuters reported. Beyond regulatory headwinds, Alphabet is also under mounting pressure from emerging AI competitors. More Wall Street Analysts: Veteran analyst drops surprise call on Tesla ahead of earnings Best Buy analyst, focused on earnings growth, reworks stock price target Microsoft analysts reboot stock price targets ahead of Q4 earnings As generative AI reshapes how users find information, traditional search is being challenged by AI tools like ChatGPT. These platforms offer more conversational responses, potentially reducing the need for users to 'Google.' There's also a risk that trade tensions could curb advertiser spending on Google's platforms, potentially impacting revenue growth. But when asked about the outlook, Alphabet's Chief Business Officer Philipp Schindler said it was too soon to make any calls. 'I think it's really too early to comment on anything happening in the second half of the year,' Schindler turn heads with new Alphabet stock price target after earnings first appeared on TheStreet on Jul 26, 2025 This story was originally reported by TheStreet on Jul 26, 2025, where it first appeared.
