Alphabet’s stock displays strong confidence before its upcoming fourth-quarter earnings report for 2025. Investors keep checking their updates, because the stock displays both high confidence and moderate uncertainty. Analysts predict that the company will earn $2.58 per share, which shows 20% annual growth even though the forecasted earnings have decreased during the last month.

The revenue forecast also shows strength, because analysts expect Q4 revenue to reach $94.7 billion, which represents 16.02% growth compared to the previous year. The company needs to meet high expectations, but it has demonstrated its ability to exceed these expectations during the past few quarters.

AI Is Powering Search & Search Is Powering the Numbers

Google Search remains the main source of revenue for Alphabet according to its business operations, which now includes advanced artificial intelligence capabilities.

Young users who prefer to let AI handle their decision-making now experience new search methods through AI Overviews and AI Mode, which provide AI-driven content about their search queries. AI Overviews has reached more than 2 billion users, while the AI Mode has globally stretched across 40 languages, and is already attracting 75 million daily active users.

Google advertisers experience positive results from the AI transformation, because the AI-powered search advertising system has become one of the company’s fastest-expanding product lines.

As per the analysts, the upcoming quarter will generate $61.27 billion in revenue from Search and other sources, which shows that Google Search maintains its disruptive power instead of being disrupted.

Google Cloud’s Growth Story

Google Cloud has become more successful through the latest developments in its expansion process. Alphabet depends on Google Cloud as its primary growth engine, while Search functions as its constant performance base.

The demand for enterprise AI infrastructure, along with Gemini 2.5 models maintains its upward trend, while AI-driven cloud products achieve triple-digit growth during the recent quarters.

Google Cloud has established itself as a major player in the cloud industry by securing multiple billion-dollar contracts throughout 2025, which surpassed its contract achievements from the previous two years. The $155 billion backlog demonstrates that customers are making substantial commitments, instead of just conducting initial tests.

The analysts predict that Google Cloud revenue will increase by 35.9% during Q4, compared to the previous year, but there is a possibility that Alphabet will face supply constraints that will limit its ability to fulfill market needs.

Strong Stock Performance Comes With a Price Tag

Alphabet’s stock price has experienced a 73.3% increase during the last six months, while it has exceeded both its industry and sector performance. Also, the sector increased 14.6% and the industry increased 64.2%.

The recent stock surge has resulted in higher valuation levels, which now exceed normal market standards. Google now trades above industry averages on a price-to-sales basis, which makes its stock valuation more sensitive to any future earnings shortfalls.

Alphabet faces multiple challenges as well, which includes reduced advertising revenue because of last year’s U.S election spending, increased sales, marketing expenses, and strong competition from Microsoft and Amazon in the cloud and generative AI markets.

Also, with a forward 12-month price/sales of 10.15x, Google is trading at a premium, and its shares are overvalued. The AI race may be exciting, but it definitely comes with high expenses.

Bottom Line

The long-term outlook for Alphabet remains attractive to investors. The company has two growth drivers, which is its AI-powered Search and its fast-growing cloud services business, while its historical financial performance shows that it can maintain success during difficult situations.

The stock becomes difficult to evaluate before earnings announcements, because of its high valuation costs and intensified competition. Google currently operates as a stock that provides better returns through patience than it does through immediate trading opportunities. The best course of action is to wait until a more advantageous entry opportunity arises.