GOOGL stock fell despite a 199% EPS beat and 24% revenue growth, driven by surging Google Cloud and AI investments.
Alphabet reported Q2 2025 revenue of $119.796 billion, up 24.23% year over year, and EPS of $9.11, beating consensus by 199.41%. The results marked the 12th consecutive quarter of double-digit revenue growth and the 11th straight EPS beat, yet shares dropped 7.22% in a week to $326.56.
Google Cloud revenue surged 82%, contributing $8.8 billion in quarterly operating income. Search and Other revenue reached $63.271 billion, up 17%, while Google Services delivered a 41.8% operating margin on $94.5 billion in revenue. Despite the strong performance, traders focused on a doubling of CapEx to $45 billion, which pushed free cash flow negative.
The sell-off created a buying opportunity for some investors, who cited Alphabet’s 16 P/E ratio and AI-driven growth as undervalued relative to peers like Microsoft and Amazon.