Prediction: Alphabet Stock Will Soar After July 23
The market is worried about Google Search's market share.
Several popular generative AI models are releasing search alternatives.
Google Search's results showed no signs of weakness in the first quarter.
10 stocks we like better than Alphabet ›
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has an important date coming up on the calendar: July 23. After the market closes on that day, it gives investors an update on Q2 results, and I think these figures could be the catalyst Alphabet stock needs to send it soaring.
Alphabet is currently one of the most disliked big tech stocks on the market, and has a fairly cheap valuation compared to its peers and the broader market. The market is particularly concerned about one item, and if Alphabet provides investors with good news on this front, the stock could be ripe for a surge.
Alphabet trades at a deep discount to its peers and the broader market
Alphabet has multiple companies underneath its umbrella, but the largest (and most important) is Google Search. Coincidentally, this is also the segment that investors are the most worried about, which is why the stock trades at a discount to its peers.
Although it's recovered from its lows, Alphabet's stock still trades for less than 19 times forward earnings, which is far less than every other big tech stock trades for. Furthermore, the S&P 500 trades for 23.7 times forward earnings, so it's valued at a significant discount to the broader market. This conveys deep fear about Alphabet's future, as its past has been quite strong.
In Q1, Alphabet's revenue increased 12% year over year, while diluted earnings per share (EPS) rose an impressive 49%. Those are strong results, and if any other big tech company posted earnings like that, they'd have a premium valuation. However, investors are worried about Google's potential to lose market share.
The primary concern on Wall Street is that Google Search is poised to be disrupted by generative AI. More consumers are starting to use generative AI instead of Google Search, which could cause its ad revenue on the platform to decline. We've already seen some effects of this occur, as Google's search engine market share fell below 90% for the first time since 2015. Additionally, rumors suggest that various generative AI firms are set to launch artificial intelligence (AI)-first web browsers that would threaten Google Chrome.
These are all massive headwinds for Google Search, but they haven't shown up in the results yet.
All the Google Search fears haven't materialized yet
In Q1, Google Search's revenue rose 10% year over year. That's in line with where a mature business should be growing, and at least from a financial standpoint, all the fears seem to be unfounded.
One thing that could be occurring is confirmation bias, where Wall Street analysts and other people in the tech realm have replaced Google with generative AI, but they've forgotten about the vast majority of the population that is never going to make the switch to generative AI because the traditional Google Search techniques ingrained in their internet behavior works just fine for them. Furthermore, Google implemented AI search overviews, which provide a generative AI-powered overview of the Google Search results.
For the vast majority of the population, this could be enough AI to keep them on the platform, which will cause Google Search to maintain its dominance.
I think this is the most likely outcome, and with each passing quarter of Google Search posting strong results (which I believe it will do in Q2), this thesis will start to become more widely accepted.
However, if you see Google Search revenue start to slip, don't be surprised if the stock sells off drastically, as it would be a confirmation of the bear case. I don't think that will happen, and I firmly believe that Alphabet is a great buy today because of the bearish sentiment that has yet to impact Alphabet's financial results.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,415!*
Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2025
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
Prediction: Alphabet Stock Will Soar After July 23 was originally published by The Motley Fool
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
12 minutes ago
- Yahoo
Verizon And Federal Wins Power Ribbon Communications' Confident Outlook
Ribbon Communications (NASDAQ:RBBN) reported a robust second quarter for 2025, driven by strong demand and key customer wins. Ribbon Communications reported total second-quarter 2025 revenue of $221 million, marking a 22% sequential increase and a 15% year-over-year rise, surpassing estimates by approximately $6 million. This growth was fueled by strong performance with major clients, including Verizon Communications (NYSE:VZ) and U.S. federal agencies, and the successful closure of several previously delayed deals. Despite some pressure on gross margins due to a mix of hardware and professional services sales, the company's Cloud and Edge segment delivered record-high profitability, and its IP Optical segment saw a significant improvement in its financial performance. Ribbon Communications also maintained its full-year outlook, forecasting continued growth and the earnings report, Rosenblatt analyst Mike Genovese reaffirmed a Buy rating for Ribbon Communications and increased his price forecast from $5.50 to $6.00. This positive adjustment came despite a slight dip in the stock's trading price on the day of the announcement. Genovese highlighted that the impressive revenue growth was driven by continued strong demand from Verizon Communications, U.S. federal agencies, new wins in critical infrastructure, and Bharti Airtel in India. He said the company also secured a new contract with a Tier 1 telecom operator in Southeast Asia, while several previously delayed deals closed during the quarter. Domestic revenue reached $117 million, jumping 40% quarter-over-quarter and 45% year-over-year. International revenue came in at $104 million, rising 6% sequentially but declining 7% compared to the prior year. Genovese noted that the Cloud and Edge segment delivered $137 million in revenue, up 27% sequentially and 24% year-over-year, which was in line with expectations driven by robust growth from Verizon and government customers. He pointed out that Verizon accounted for 20% of Ribbon's total revenue and was the only customer exceeding 10% of sales, as it continues to modernize its voice network. Cloud and Edge gross margins contracted 110 basis points sequentially and 410 basis points year-over-year to 61.9%, largely due to a higher mix of professional services and hardware and a dip in maintenance and software sales. Despite the margin pressure, Genovese pointed out that the segment posted a record adjusted EBITDA of $37 million. The analyst said IP Optical revenue rose to $84 million, up 13% sequentially and 2% year-over-year, beating estimates by 6%. Sales in India and North America surged over 40% year-over-year. Excluding Eastern Europe, the IP Optical segment posted a 5% annual increase. He noted that the segment's gross margin expanded 760 basis points sequentially to 35.9%, supported by stronger North American sales, improved mix and margins in Asia-Pacific, and better fixed cost absorption from higher volume. The adjusted EBITDA loss for IP Optical narrowed to $5 million from a $15 million loss a year ago. Company-wide gross margin reached 52.1%, expanding 340 basis points quarter-over-quarter, though contracting 230 basis points year-over-year, missing estimates due to a greater share of hardware and services revenue, Genovese noted. The analyst said that operating margin expanded sharply to 12.5%, up 1,120 basis points sequentially and 300 basis points year-over-year, beating projections by 20 basis points. He noted that adjusted EBITDA totaled $32 million, representing a 433% increase sequentially and 47% growth year-over-year, at the high end of company guidance. Genovese noted that management guided third-quarter revenue between $213 million and $227 million, slightly below prior estimates. The analyst expects IP Optical revenue to grow sequentially, while Cloud and Edge revenue will likely decline, primarily due to project timing with Verizon. Gross margins are projected between 53.5% and 54%, below the prior 55.9% estimate, and adjusted EBITDA is forecast between $28 million and $34 million. The company reiterated its full-year 2025 outlook, maintaining revenue guidance of $870 million to $890 million, gross margins of 54%–55%, and adjusted EBITDA of $130 million to $140 million. However, management noted that GMs and EBITDA are trending toward the lower end of those ranges due to stronger-than-expected product and professional services sales and a $2 million quarterly opex impact from the weaker U.S. dollar. Genovese noted that management expects the fourth quarter to remain the strongest quarter of the year, as is typical for Ribbon. Additionally, the firm anticipates $15 million to $20 million in tax savings following a recent bill passed by Congress. Genovese highlighted that the Ribbon story remains attractive, especially at a valuation of 12.5x estimated 2026 EPS. The analyst emphasized Ribbon's ability to weather recent headwinds, such as its exit from Eastern Europe and timing-related delays in the Federal and Enterprise sectors, while consistently delivering on its guidance across multiple quarters. He also noted meaningful improvement in the Cloud and Edge narrative, particularly with Verizon's shift to next-gen voice infrastructure, enhancing Ribbon's growth prospects. Additionally, Genovese noted that Ribbon could win a similar deal with AT&T (NYSE:T), which has committed to fully modernizing its voice systems by 2029. He highlighted growing synergies between Ribbon's business segments, as Verizon now uses its routers for the Cloud and Edge upgrade, a signal of broader strategic alignment and opportunity ahead. Price Action: RBBN stock is trading lower by 11.7% to $3.76 at last check Thursday. Latest Ratings for RBBN Date Firm Action From To Jan 2021 B. Riley Securities Initiates Coverage On Buy Oct 2019 Northland Capital Markets Downgrades Outperform Market Perform Aug 2018 Cowen & Co. Upgrades Underperform Market Perform View More Analyst Ratings for RBBN View the Latest Analyst Ratings Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? This article Verizon And Federal Wins Power Ribbon Communications' Confident Outlook originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
12 minutes ago
- Yahoo
Tesla Stock Crashed Today. Why Elon Musk Thinks It's Time to Buy.
Key Points Tesla didn't impress investors with its quarterly update. CEO Elon Musk also warned of some turbulent days ahead. Another Musk prediction might have Tesla bulls excited. These 10 stocks could mint the next wave of millionaires › Investors knew electric vehicle (EV) sales have been slumping for Tesla (NASDAQ: TSLA). The EV leader announced a 13.5% year-over-year drop in second-quarter deliveries on July 2. Yet the stock is tanking today after Tesla reported its full second-quarter financial update today. Shares dropped as much as 10% before paring some of that loss. As of midday trading, Tesla stock was still down by about 9% after what was considered a disappointing report. Tesla bulls still might have a reason to buy the dip, however. The robotaxi rollout is on track While investors already knew deliveries were down 13.5%, there was further disappointment in seeing automotive revenue decline by 16% versus the year-ago period. That shows increasing pressure on vehicle pricing. Gross profit margin declined year over year as a result. That wasn't the end of the bad news, either. Free cash flow was just $100 million in the second quarter. Even its previously fast-growing energy generation and storage business reported a 7.5% revenue drop versus last year. CEO Elon Musk focused on the future in the earnings conference call, and Tesla bulls probably liked what he said. Musk stated: "I think we will probably have autonomous ride-hailing in probably half the population of the US by the end of the year. That's at least our goal, subject to regulatory approvals. I think we will technically be able to do it." Pump the brakes on Tesla Tesla's robotaxi business is what Tesla bulls are counting on. Some analysts think autonomous ride-hailing services could become a trillion-dollar business. While there could be much competition for that market, Tesla could become a major player, with voluminous amounts of data from its EVs already on the road. Elon Musk has made bold predictions that haven't always materialized. Risk-tolerant investors might want to buy today's dip with a proper allocation based on that potential robotaxi market. But it shouldn't come as a surprise if the predicted rollout of Tesla robotaxis isn't as big or as fast as Musk predicted yesterday. Should you buy stock in Tesla right now? The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $634,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,046,799!* Now, it's worth noting Stock Advisor's total average return is 1,037% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Howard Smith has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy. Tesla Stock Crashed Today. Why Elon Musk Thinks It's Time to Buy. was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12 minutes ago
- Yahoo
Why Plug Power Stock Rocketed Higher This Morning and Then Fell Back to Earth
Key Points Plug Power stock shot higher early in today's trading session, but it quickly gave back its gains. Peer Bloom Energy is working with Oracle to deploy fuel cell technology at data centers. At this point, Plug Power stock remains a highly speculative investment. 10 stocks we like better than Plug Power › Racing out of the gate, Plug Power (NASDAQ: PLUG) stock climbed as much as 9.9% early in Thursday's trading session, but the early enthusiasm that investors had expressed soon faded. Plug's peer Bloom Energy (NYSE: BE) did, in fact, have something positive to report today, and investors were bidding Plug stock higher in sympathy; however, cooler heads seem to be prevailing, and Plug stock has given back much of its earlier gains. As of 11:40 a.m. ET, shares of Plug Power are down 0.6%. What powered the excitement this morning? Plug's peer Bloom Energy announced today that it will be partnering with Oracle (NYSE: ORCL) to deploy fuel cell technology at certain Oracle Cloud Infrastructure (OCI) data centers located in the United States. The soaring popularity of artificial intelligence (AI) is placing high demands on Oracle's data centers, and to meet the related power needs of the data center infrastructure, the company is turning to fuel cell technology. Often, investors will bid Plug stock higher on any semblance of positive news related to the hydrogen and fuel cell industry. Today is proving to be no different. Plus, Plug investors are likely waxing optimistic that other data center companies will choose to collaborate with Plug on similar deals. Should investors plug Plug stock into their portfolios? Consistently reporting net losses, Plug remains a high-risk investment. While the news of Bloom's deal with Oracle may suggest to some that Plug will find itself in high demand from data center companies looking to increase their power capacities with fuel cell technology, this is far from adequate material to base an investment. Investors committed to hydrogen and fuel cell exposure, therefore, would be better advised to consider Bloom Energy at this point, or some other leaders in the industry. Should you invest $1,000 in Plug Power right now? Before you buy stock in Plug Power, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Plug Power wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $634,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,046,799!* Now, it's worth noting Stock Advisor's total average return is 1,037% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy. Why Plug Power Stock Rocketed Higher This Morning and Then Fell Back to Earth was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
