Alphabet Stock (GOOGL) Hitting New Highs Ahead Of Earnings – What To Expect

Alphabet Inc. (GOOGL) is set to release its third-quarter 2025 earnings report today, after market close, and markets are keenly watching to see if the tech giant can justify its recent stock surge amid growing concerns about an artificial intelligence (AI) bubble.

The stock has made a new high at $270.73 in the latest session, and has built up some real momentum leading in. GOOGL has gained 9.6%, and 67% over a one month and six month basis respectively, with the street showing no signs of caution into today's earnings.

Analysts are projecting a solid Q3 2025, with earnings per share (EPS) expected to reach $2.26, a 6.6% year-over-year increase. Revenue is anticipated to climb by 13.45% to $100.14 billion, driven by a resurgence in marketing expenditures and the continued strength of digital advertising. Google Cloud is expected to be a major growth driver, with revenue projected to jump 29% to $14.65 billion, fueled by enterprise demand for cloud services and AI-enabled infrastructure.

Alphabet's stock has demonstrated impressive momentum, buoyed by its dominant position in digital advertising, the rapid expansion of Google Cloud, and significant investments in AI.

Alphabet's aggressive investment in AI is a double-edged sword. The company has committed over $24 billion to AI-related projects this year, including significant investments in data centers in India and the U.S. These investments are designed to bolster AI infrastructure and solidify Alphabet's market leadership. However, concerns are mounting across the tech sector about a potential AI bubble.

A Reuters report highlighted that major U.S. tech firms are expected to spend $400 billion on AI infrastructure this year, yet a recent MIT study indicates that only a small fraction of AI projects actually yield measurable gains. This raises questions about the sustainability of such rapid investment and the potential for wasted capital.

The upcoming earnings call will be crucial for Alphabet to address these concerns and demonstrate the tangible benefits of its AI investments. Analysts will be looking for evidence that Alphabet is not simply chasing the AI hype, but is instead strategically deploying AI to drive real business value.

Furthermore, while Google Cloud's growth is undoubtedly impressive, it still lags behind market leaders like Amazon Web Services (AWS) and Microsoft Azure. To justify its high valuation, Alphabet needs to show that Google Cloud can continue to gain market share and become a more significant contributor to overall revenue and profitability.

While the prevailing narrative focuses on the potential pitfalls of an AI bubble, it's possible that the market is underestimating the long-term transformative potential of AI. Alphabet, with its vast resources and deep expertise in AI, may be better positioned than its competitors to navigate the challenges of AI integration and scalability.

The company's investments in AI infrastructure could create a significant competitive advantage in the years to come, allowing it to develop groundbreaking new products and services that drive substantial revenue growth. Moreover, the concerns raised about AI integration and scalability are not unique to Alphabet or even the broader tech industry.

Whilst concerns have been raised, momentum has not been for slowing. With trade negotiations with China seemingly progressing well, further highs for markets appear to be on the cards.