Will Alphabet Stock Keep Rising After Crushing Q1 Earnings Expectations?

Alphabet GOOGL shares had spiked as much as +4% in today’s trading session, with the tech conglomerate blowing away its Q1 earnings expectations after-market hours on Thursday.The strong diversification in its Q1 results couldn’t have come at a better time, as regulatory scrutiny surrounding the company’s dominance in the online search and advertising market has weighed on Alphabet’s stock. To that point, GOOGL shares are still down 14% year to date despite sitting on +37% gains in the last three years to roughly match the Nasdaq and top the benchmark S&P 500’s +32%.Image Source: Zacks Investment Research Alphabet’s Strong Q1 Results Seeing what CEO Sundar Pichai stated was healthy growth across its business segments, including in new AI-powered features, Alphabet’s Q1 sales increased 13% to $76.48 billion versus $67.59 billion in the comparative quarter. This also topped Q1 sales estimates of $75.52 billion by 1%. Google Search, YouTube advertising, and Google Cloud each had double-digit revenue growth during Q1. This drove Alphabet’s Q1 EPS to $2.81, which blasted expectations of $2.02 by 39% and soared 48% from $1.89 per share a year ago. Furthermore, Alphabet has now surpassed the Zacks EPS Consensus for nine consecutive quarters, posting an average earnings surprise of 14.64% in its last four quarterly reports.Image Source: Zacks Investment Research Alphabet’s Cautious Outlook While Alphabet did not provide specific projections in regard to its full-year guidance, the tech giant does expect its Google services advertising revenue to be impacted by lapping the strength experienced from the financial services industry throughout 2024.Alphabet also stated its cloud services are in a tight supply-demand environment and could see variability in revenue growth rates depending on capacity deployment, but does expect relatively higher capacity deployment towards the end of the year.Based on Zacks estimates, Alphabet’s total sales are currently projected to rise 9% in fiscal 2025 and are forecasted to increase another 10% in FY26 to $355.95 billion. Annual earnings are expected to be up 8% this year and are projected to spike another 14% in FY26 to $9.90 per share.Image Source: Zacks Investment Research Alphabet’s Dividend Increase During Q1, Alphabet highlighted a return to shareholders in the form of $15.1 billion in share repurchases and $2.4 billion in dividend payments. Even better, Alphabet announced a 5% increase to its quarterly dividend and approved an additional $70 billion share repurchase authorization.It’s noteworthy that this would mark Alphabet’s first-ever dividend increase since instating a payout to shareholders in June of 2024. The increase would bring Alphabet’s annual dividend to $0.84 per share from $0.80.Image Source: Zacks Investment Research Conclusion & Final Thoughts It wouldn’t be surprising if Alphabet stock continued to move higher following its strong Q1 results. However, more meaningful upside will largely depend on the trend of earnings estimate revisions in the coming weeks as analysts digest Alphabet’s cautious guidance. For now, Alphabet stock continues to land a Zacks Rank #3 (Hold).There is no doubt that Alphabet is offering long-term value to shareholders with GOOGL having the cheapest forward P/E valuation among the Mag 7, but better buying opportunities could still be ahead.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>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 Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks