Alphabet (GOOGL): LivePerson Announces Significant Expansion of Partnership with Google Cloud
A user's hands typing a search query into a Google Search box, emphasizing the company's search capabilities.
In Q2 2025, Alphabet Inc. (NASDAQ:GOOGL)'s consolidated revenues rose 14%, or 13% in constant currency, YoY to reach $96.4 billion, reflecting strong momentum throughout the business. Furthermore, Google Cloud revenues rose 32% to $13.6 billion, thanks to the growth in Google Cloud Platform throughout core GCP products, AI Infrastructure, and Generative AI Solutions. Overall, AI has been positively impacting every part of Alphabet Inc. (NASDAQ:GOOGL)'s business, fueling strong momentum.
Google Cloud operating income rose to $2.8 billion, with operating margin increasing from 11.3% to 20.7%. The expansion in cloud operating margin was backed by healthy revenue performance and continued efficiencies in the expense base, partially mitigated by increased technical infrastructure usage costs, including associated depreciation. Amidst increased AI investments, the focus remains on fueling improvements in productivity and efficiency to offset the growth in technical infrastructure-related expenses.
Oakmark Funds, advised by Harris Associates, released its Q2 2025 investor letter. Here is what the fund said:
'Alphabet Inc. (NASDAQ:GOOGL) was the top contributor during the quarter. The U.S.-headquartered technology company's stock price rose relatively steadily throughout the period after it delivered solid first-quarter 2025 earnings and mega-cap tech stocks trended higher. Despite concerns around incremental competition, Google Search revenue grew low-double digits and was slightly ahead of consensus forecasts. Operating income was also ahead of expectations, with Alphabet improving margins even as the company continues to make substantial investments in AI. We believe the potential payoff from these investments across each of Alphabet's business units remains underappreciated. After adjusting for the value of Google Cloud and Alphabet's Other Bets, we believe the Search, YouTube and Android businesses are being valued at a low-teens price-to-earnings (P/E) multiple. We still see this as an attractive valuation.'
While we acknowledge the potential of GOOGL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 13 Cheap AI Stocks to Buy According to Analysts and 11 Unstoppable Growth Stocks to Invest in Now
Disclosure: None. This article is originally published at Insider Monkey.
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