Google-parent Alphabet continues to under-perform as the S&P 500 and Nasdaq hit new highs. Google stock has shed 7% in 2025 amid investor angst over potential disruption of the core internet search business and the emergence of generative artificial intelligence.
Competition from OpenAI's ChatGPT, Perplexity and others has forced Google to overhaul its search results. ChatGPT delivers answers to search queries, while Google's business model has been based on providing web links.
Further, Google began deploying AI Overviews in the U.S. in mid-2024, with conversational summaries topping links for many search queries. Google says AI Overviews now has over 1.5 billion monthly active users. The long range question is how Google search ad revenue growth will be impacted by the AI Overviews format.
Meanwhile, Alphabet stock is trading at a historically low valuation – 19 times 2025 earnings, its lowest relative multiple in over a decade, noted Michael Nathanson, analyst at MoffettNathanson in a report.
"We believe, based on our math, that fears around the future of Search are largely priced in and that investors are overlooking several emerging dynamics that could support Google's competitive position and long-term monetization," Nathanson said.
"Alphabet is no longer passive in its GenAI strategy. In an effort to stem user defections to ChatGPT and other GenAI challengers, Google is accelerating the integration of AI directly into core search workflows. Announcements from I/O in May showcased how Google is drawing on its deep infrastructure and talent base to close the product gap with OpenAI, offering faster, cheaper, and more embedded capabilities across the Google ecosystem."
In addition, Google is among artificial intelligence stocks to watch.
Will OpenAI Deal Boost Google Cloud?
Meanwhile, Alphabet hosted the Google I/O developers conference in May, where it made many artificial intelligence announcements.
In a surprise, OpenAI plans has turned to Google's cloud computing unit for data center capacity. Even better, OpenAI will rent Google's TPU accelerators rather than Nvidia devices to power its workloads, said a report. "This (TPU) agreement would be a significant endorsement of Google's AI infrastructure capabilities," said Morgan Stanley analyst Brian Nowak in a report.
Google's cloud computing unit's revenue rose 28% in Q1. Cloud growth could accelerate as more AI server infrastructure ramps up in the second half of 2025.
In March, Alphabet agreed to buy fast growing cybersecurity firm Wiz in an all-cash $32 billion deal. Another question for Google stock: will the Wiz purchase boost cloud computing market share versus Amazon.com and Microsoft?
Google Stock: Antitrust Worries
Meanwhile, antitrust lawsuits filed by the Department of Justice have pressured Google stock. Both Google's internet search and advertising businesses are under DoJ scrutiny.
A federal judge on April 17 ruled that Google has used monopoly-building tactics to dominate online advertising. The Department of Justice had claimed Google's dominance of the digital ad market has damaged advertisers and content creators. Alphabet said it plans to appeal.
The internet giant already is battling another antitrust lawsuit filed by the DoJ. Federal judge Amit Mehta last year ruled that Alphabet illegally maintained a monopoly over online search services and prevented rivals from developing their own products.
A key part of the ruling centered on multibillion-dollar payments that Google makes to Apple to be the default search engine on iPhones.
Judge Mehta is expected to decide what legal remedies are required in August. The DoJ has requested that Google be forced to sell its Chrome browser and take other measures, possibly involving Apple.
GOOGL Stock: Waymo Expands
Google delivered first quarter earnings and revenue that topped consensus estimates as internet search advertising growth beat expectations while cloud computing growth was virtually in-line and YouTube fell slightly short.
Further, Google reiterated $75 billion in 2025 capital spending in 2025 as it increases artificial intelligence investments. From an accounting view, high depreciation on data center servers is another concern because it lowers earnings. Analysts expect more cost cutting to offset rising depreciation.
Meanwhile, autonomous vehicle pioneer Waymo is a wild card for Google stock.
The ride-hailing service leader Waymo and Japanese carmaker Toyota have signed a preliminary agreement to explore the development of an autonomous vehicle platform as well as "personally owned vehicles.
The ride-hailing service leader Waymo keeps adding to its resume with market expansions and technology advances. Yet Wall Street has yet to price in Waymo's momentum in the valuation of Google stock.
In October, Waymo closed a $5.6 billion funding round, including Google and previous investors.
On Google's first quarter earnings call, Alphabet disclosed that Waymo has hit 250,000 paid robotaxi rides per week in the U.S., up from 200,000 in February.
In 2024, Waymo served over 4 million fully autonomous rides across Los Angeles, San Francisco and Phoenix. The company announced plans to expand to Austin and Atlanta this year and Miami in 2026.
Also in early 2025, Waymo said it would test its self-driving taxis in more than 10 new cities across the U.S., including Las Vegas and San Diego.
Google Stock: Is It A Buy Or Sell Now?
Whether the internet giant is a buy depends on fundamental and technical factors as well as each investor's own goals, strategy and risk tolerance.
GOOGL stock popped 37% in 2024, though it pulled back from a high of 201.42 set on Dec. 17.
Also, the Relative Strength Rating of Google stock currently stands at only 57 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google stock holds an Accumulation/Distribution Rating of B. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, Alphabet stock holds an IBD Composite Rating of 92 out of a best possible 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, GOOGL stock has a 21-day ATR of 2.53. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
Also, as of July 1, Alphabet stock needs to form a new base to be actionable.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
