Google earnings were 'pristine.' But does that actually matter for Alphabet's stock?

MW Google earnings were 'pristine.' But does that actually matter for Alphabet's stock?

By Therese Poletti

The current stock market is driven more by headlines than fundamentals, Bernstein analyst says

Alphabet Inc.'s earnings were a bit better than Wall Street had expected. But will that beat really matter for the company's stock?

Bernstein Research analyst Mark Shmulik said in a note to clients that Alphabet $(GOOG)$ $(GOOGL)$, by most accounts, "delivered a pristine quarter." But he wonders if investors are paying enough attention to fundamentals, in a market where headlines are driving so much of the narrative.

Alphabet shares were up about 2% on Friday, but whether they're poised for sustainable gains remains to be seen. Shmulik pointed out that it was "too early to do a victory dance ... in a cyclical sector that's about to go through the car wash."

Also read: Investors were worried ahead of Alphabet earnings. In the end they got relief.

He noted that the company's earnings beat on nearly every key metric, including revenue growth that was up 12% and "good enough" YouTube revenue that was up 10%.

But he reminded investors that the estimates had come down over the past six weeks in the face of macroeconomic headlines. There are growing worries about an economic slowdown due to the Trump administration's tariffs and their impact on markets.

Alphabet's earnings call didn't exactly settle the score about how the Google empire could fare in this uncertain environment. "We got almost no color on how the tariff and macro effects could impact Google's business through the year," he said.

The company did mention upcoming employee stock grants and rising depreciation and legal costs, which could get in the way of recent progress on operating margins. But the Bernstein analysts "learned very little about how all the potential changes to the ecosystem could impact Google's financials going forward," Shmulik said.

He asked rhetorically what to do with Alphabet's stock, pointing out that this earnings report could be "as good as it gets."

Alphabet doesn't offer traditional financial forecasts. "No guidance means no need to be conservative or highlight risks beyond what's on the paper," Shmulik wrote. "We wouldn't be surprised to see profit taking in the name here with a nice recovery in the share price off the bottom over the past few weeks."

He reiterated a market-perform rating on the stock but raised his price target to $185 from $165.

-Therese Poletti

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April 25, 2025 13:42 ET (17:42 GMT)

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