An analyst reiterates a bull case on Alphabet (GOOGL) following strong Q3 2025 results for Google Cloud, which reported $15.16 billion in revenue, up 34% year-over-year, and an operating income of $3.59 billion with a 23.7% margin. This growth is attributed to AI-led momentum and enterprise AI adoption, with a significant $155 billion backlog indicating future strength. The analyst highlights Google's competitive position in large-scale AI inference with its Ironwood TPUs and notes Alphabet's valuation remains attractive at approximately 27x next year's earnings compared to hyperscaler peers.
Google Cloud delivered strong Q3 2025 results, reporting $15.16 billion in revenue, a 34% year-over-year increase, alongside a $3.59 billion operating income and a 23.7% margin. This "clean beat" was primarily fueled by significant AI-led momentum and robust enterprise AI product adoption within the GCP segment. The substantial $155 billion backlog, which grew 46% sequentially, indicates strong future revenue visibility and sustained demand. Google's upcoming Ironwood (Gen-7 TPU) is expected to bolster its competitive edge in large-scale AI inference, supported by Anthropic's expanded access to 1 million TPUs. A larger capital expenditure plan further signals a positive outlook for 2026. Alphabet's valuation remains compelling, trading at approximately 27x next year's earnings, positioning it as the second cheapest among hyperscalers despite its stronger year-to-date performance. The analyst maintains a bullish stance on Alphabet (GOOG/GOOGL), with Google Cloud serving as a critical driver for this positive outlook.
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