Pixel Gets New Features and Android 16: Should You Hold GOOGL Stock?
Alphabet GOOGL is adding new features to Pixel, including the new VIPs widget, stickers on Gboard with Pixel Studio (using Generative AI), improved photography skills, AI-powered editing in Google Photos, and enhanced accessibility features. Android 16, which brings the new Material 3 Expressive design, is now available for Pixel users.
The VIPs widget helps users to always stay connected to their friends and family, as VIP contacts can bypass the Do Not Disturb feature. Pixel users can now create stickers of anything on Gboard by just typing a prompt, choosing the right emotion and sending, without having to switch apps. Existing features like Satellite SOS are now available in Australia, which users can use for emergency services. The reorder app can now provide AI-generated summaries of a user's recordings in French and German. Users of Pixel 8 phones now have access to the Clear Voice feature.
The latest features are expected to boost the shipment of the Pixel. In the United States, the launch of the Pixel 9a and the continuing popularity of the Pixel 9 series are noteworthy. Google Pixel is gaining traction in Europe, per 9TO5 Google, which cited data from Canalys. The device saw a 43% year-over-year jump, shipping close to 1 million devices in Europe in the first quarter of 2025. However, Pixel lags Apple 's AAPL iPhone 16 shipment, which, as per Counterpoint, was the top-selling smartphone brand in the first quarter of 2025.
Alphabet Shares Rides on AI Innovation, Cloud Prospect
Alphabet shares have jumped 11.2% in the past month, outperforming the broader Zacks Computer & Technology sector's appreciation of 5.2%. GOOGL shares have outperformed Apple as well as Microsoft MSFT and Amazon AMZN, two of its closest competitors in the cloud computing domain. Per Synergy Research Group data, Amazon's share in the worldwide cloud infrastructure market amounted to 29% in the first quarter of 2025, ahead of Microsoft's Azure platform at 22% and Google Cloud at 12%. While Microsoft and Amazon shares increased 5.2% and 0.9% in the past month, respectively, Apple shares dropped 6.7%.
GOOGL Stock's Performance
Alphabet's focus on leveraging AI to drive growth is a key catalyst. AI is infused heavily across its offerings, including Search, Google Cloud and Pixel.
Alphabet has been taking up initiatives to improve its market share in Search through AI innovations. The addition of AI mode expands AI Overview's advanced reasoning, thinking and multimodal capabilities. AI Overviews is driving a more than 10% increase in usage of Google for queries that support AI Overviews in Google's biggest markets, like India and the United States. AI Overview is currently used by more than 1.5 billion people monthly. AI mode is now available in the United States.
Circle to Search has been another key catalyst driving user engagement. At the end of the first quarter of 2025, Circle to Search was available on 250 million devices, with usage increasing roughly 40% during the quarter.
In Cloud, Alphabet is benefiting from its partnership with NVIDIA. Google Cloud was the first cloud provider to offer NVIDIA's B200 and GB200 Blackwell GPUs and will be offering its next-generation Vera Rubin GPUs. Introduction of 2.5 flash, Imagen 3 and Veo 2 are noteworthy developments. Google Cloud is becoming a preferred choice for enterprises planning to deploy AI agents thanks to the Agent Development Kit and a low-code tool offering Agent Designer. The addition of Wiz to Google Cloud will boost competitive prowess against the likes of Amazon and Microsoft in the cloud computing space.
Earnings Estimate Revisions Show Upward Trend for GOOGL
The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $2.12 per share, up a couple of cents over the past 60 days, indicating 12.17% year-over-year growth.
The consensus mark for 2025 earnings is pegged at $9.51 per share, up 8% over the past 60 days, suggesting 18.28% year-over-year growth.
GOOGL is a Risky Stock on Regulatory Headwinds
Regulatory headwinds like the lawsuit between the Department of Justice (DOJ) and GOOGL over Google Search are a concern. The DOJ argues that Google has inked anticompetitive deals with Apple and other companies for prime placement of its search engine and plans to break up Google to separate products like Chrome, Search, and Android. DOJ's proposal doesn't bode well for Alphabet, given growing competition from AI-powered products like ChatGPT, Grok, DeepSeek, Perplexity and Meta AI.
GOOGL is suffering from a lack of capacity, and until new capacity comes online this year, cloud revenues are expected to witness 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. Alphabet expects advertising revenue growth to be lower due to a challenging year-over-year comparison. The company enjoyed solid growth in the financial services vertical in 2024.
GOOGL Stock is Overvalued
The Value Score of C suggests a stretched valuation for Alphabet at this moment.
Alphabet stock is trading at a premium, with a forward 12-month Price/Sales of 6.34X compared with the Zacks Internet Services industry's 5.29X.
Conclusion
Alphabet's growing AI capabilities and significant investments in cloud computing bode well for long-term investors. So, investors who have already invested in GOOGL stock should stay put.
However, stiff competition in the cloud space, as well as the search engine market and increasing regulatory headwinds make the GOOGL stock risky in the near term.
Alphabet currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to start accumulating the stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
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