Alphabet Inc. – Technology conglomerate and operator of Google

Brief summary for investors: Alphabet Inc. is a leading global technology group whose core business is based on the Google search engine, advertising marketing (YouTube, Display), and the growing Google Cloud Platform. The company enjoys exceptional profitability and strong free cash flow generation.

Development The share price showed strong growth from 2020 to the end of 2021, driven by the pandemic-related acceleration of digitalization and high advertising revenues. In 2022, the price corrected significantly, due to macroeconomic concerns, rising interest rates, and a resulting dip in the advertising market. Since 2023, the share price has been recovering steadily, driven by advertising revenue consolidation, accelerated growth in the more profitable cloud segment, and cost-efficiency measures. The recent price volatility (Q2 2025) may reflect short-term adjustments in expectations.

Opportunities:

• Artificial Intelligence (AI): Alphabet is a leader in AI research (DeepMind) and is massively integrating AI into its search engine, cloud services (Gemini), and advertising products, which could lead to efficiency gains and new revenue streams.
• Growth of Google Cloud: The cloud segment is growing profitably and gaining market share in a highly competitive environment against AWS and Azure, reducing its dependence on the advertising business.
• Diversification through "Other Bets": In the long term, projects in the areas of healthcare technology (e.g., Verily) and autonomous driving (Waymo) could generate significant value.

Risks:

• Regulatory Intervention: Alphabet is under strict regulatory scrutiny worldwide due to issues such as market power, data protection, and advertising practices. Antitrust proceedings and new laws could significantly restrict its business practices and result in heavy fines.
• Cyclical dependence of the advertising business: The main revenue driver (advertising) remains cyclical and tied to the general economic situation. A recession would immediately impact revenues.
• Competition: Intense competition in the cloud (Microsoft, Amazon), AI (Microsoft/OpenAI), and search (AI-powered response services such as ChatGPT) threatens the company's dominant market position.

Additional notes: The recent political transactions (purchases and one sale) are not meaningful for the fundamental valuation and should not be overestimated. The high per-employee ratios underscore the company's exceptional productivity and profitability.

Conclusion: Alphabet remains a financially extremely healthy group with a dominant market position, high profit margins, and strong cash generation. The strategic focus on AI and cloud services diversifies the business model for the long term. However, key investment decisions depend on the assessment of regulatory risks and the company's ability to maintain its technological leadership in the AI race.

Read full AI analysis