Stock Price Slump: The One Split-Shares Company You'd Regret Not Investing In During the Downturn
Google Cloud, a key component of Alphabet's business, is currently experiencing a robust growth rate of 32% year-over-year. In Q2 2025, the unit's revenue reached an impressive $13.6 billion, with its annual revenue run rate surpassing $50 billion.
This growth is significantly contributing to Alphabet’s overall revenue, which totaled $96.4 billion in Q2 2025, up 14% year over year. Google Cloud is one of the key double-digit growth drivers alongside Google Search, YouTube ads, and subscriptions.
The Google Cloud segment’s operating income also rose sharply to $2.8 billion in Q2 2025 from under $1.2 billion a year earlier, indicating improving profitability.
Looking forward, Alphabet is investing heavily in Google Cloud’s infrastructure to sustain this growth and meet rising demand. The company plans to increase its capital expenditures (capex) to $85 billion in 2025, with an additional $10 billion allocated specifically to Google Cloud’s data center expansion and server capacity enhancement.
The Google Cloud backlog — representing signed but not yet recognized contracts — surged 38% year on year to $106 billion, underlining strong forward revenue visibility and large-scale customer commitments, including multiple billion-dollar deals in the first half of 2025.
In summary, Google Cloud's growth is very strong, supported by a $106 billion backlog, increased capital investment for data center expansion, and rapid customer acquisition. This positions Google Cloud as a critical and expanding pillar of Alphabet’s business, with investments targeting capacity constraints persisting into 2026 and beyond.
Meanwhile, YouTube, another key player in Alphabet's portfolio, is also making strides. Over 1.5 billion users access YouTube's "Shorts" format every month, with 30 billion daily views. In Q2 2022, YouTube generated $7.3 billion in revenue, marking a 4.8% growth compared to the previous year.
Despite some challenges in the broader market, Alphabet's diverse revenue streams have been beneficial. The company's stock trades at a price-to-earnings multiple of 20.9, which is 18% cheaper than the Nasdaq 100 index's multiple of 25.7.
Alphabet's Q2 2022 earnings results showed some bright spots, despite missing Wall Street's expectations. The stock rose 7% on the next trading day. However, it's important to note that the company's stock has declined by 22% in 2022.
Despite this, some early indicators suggest the worst of the advertising industry's headwinds might already be in the rearview mirror. Google Search, YouTube, and an expanding hardware segment (including Pixel smartphones and Nest home devices) are among Alphabet's main businesses.
In 2006, Alphabet purchased YouTube for $1.65 billion, a move that has proven to be a significant contributor to its current success. The company has also recently undergone a 20-for-1 stock split, making it more affordable for smaller investors.
Recently, YouTube has partnered with Shopify, allowing creators to tag products in their videos and live streams for direct consumer shopping. This move is expected to further boost YouTube's revenue and its position as a leading platform in the digital advertising industry.
In conclusion, Google Cloud's impressive growth and Alphabet's diverse business portfolio continue to position the company as a leader in the tech industry. Despite some challenges, the company's investments in Google Cloud and its other businesses suggest a strong commitment to growth and innovation.
- Alphabet's commitment to growth and innovation is evident in its plans to invest an additional $10 billion in 2025, specifically for Google Cloud's data center expansion and server capacity enhancement, demonstrating their focus on the finance and investing sector, particularly the stock-market and technology-driven segment.
- The growth of Google Cloud is not only showcased by its robust year-over-year growth rate but also by the significant increase in its capital expenditures (capex) for 2025, indicating that they are actively investing in their future, particularly in finance and technology.
- The strong forward revenue visibility of Google Cloud, as evidenced by its $106 billion backlog, underscores the potential for substantial returns on investments in this technology-driven segment of Alphabet's business, making it an attractive proposition for finance and investing in the stock-market.
