Wall Street reacted favorably to Alphabet's (GOOGL) first quarter earnings report, prompting investors to consider catalysts that could support the stock. Forthcoming events, including a software developers conference and a marketing event, may provide updates on the company's artificial intelligence initiatives.
The Google I/O developers conference is scheduled for later in May, followed by the Google Marketing Live event the next day. Additionally, YouTube will host an event targeting advertisers. These gatherings come as Alphabet stock has seen declines this year, though shares gained ground in April.
The company reported results for its search and advertising segments, while cloud computing demonstrated growth and YouTube performance fell slightly short of expectations. Alphabet reiterated plans for substantial capital spending in 2025, focused on increasing artificial intelligence investments. High depreciation costs related to data center servers are a factor affecting earnings, with analysts expecting cost controls to help offset this.
On the artificial intelligence front, Alphabet is actively developing its Gemini AI chatbot, which reports show has a large user base worldwide. Discussions regarding a licensing deal with Apple (APPL) are underway, potentially bringing Gemini to iPhones by year-end, according to Chief Executive Sundar Pichai.
The internet search business faces new artificial intelligence-driven competition. Alphabet began deploying AI Overviews in the U.S. in 2024, providing conversational summaries for search queries. The company reported AI Overviews had over 1.5 billion monthly active users on its recent earnings call.
Concurrent with business operations, Alphabet faces antitrust lawsuits filed by the Department of Justice. Both the internet search and advertising operations are under scrutiny. A federal judge recently found the company used tactics to maintain dominance in online advertising, a ruling Alphabet intends to appeal. Separately, a judge ruled last year that Alphabet illegally held a monopoly in online search services.
A central element of the search lawsuit involves large payments from Alphabet to Apple to maintain its position as the default search engine on iPhones. A decision on potential remedies, which could include measures impacting Alphabet's Chrome browser, is anticipated by August.
Beyond its core businesses, Waymo, Alphabet's autonomous vehicle unit, continues to expand. The company has entered into a preliminary agreement with Toyota to explore developing an autonomous vehicle platform. Waymo reported a rise in paid robotaxi rides per week and expanded service areas across the U.S., completing millions of autonomous rides in 2024.
Investment considerations for Alphabet stock include factors such as market dynamics and analyst ratings. The Relative Strength Rating for the stock currently stands at 31, with a rating of 80 or higher typically seen in high-performing stocks. The stock holds an Accumulation/Distribution Rating of C, indicating neutral institutional buying and selling activity.
The stock's IBD Composite Rating is 80, reflecting a blend of performance metrics. The average true range for Alphabet stock is 4.02%. Market volatility often favors stocks with lower ATR values. As of May 5, the stock needs to establish a new base pattern for potential trading action.
Sundar Pichai commented on the potential deal with Apple: "We expect to strike a licensing deal with Apple by the middle of this year."
