Alphabet: Time of the giants

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  Wolfgang Hagl
  Redaktor

The reporting season on Wall Street is heading towards its decisive phase. Six companies from the “Magnificant 7” club will present their quarterly results by the end of July. The earnings prospects for the US stock market depend to a large extent on the success of these technology giants. According to Factset, analysts expect the companies included in the S&P 500 to have posted average earnings growth of 5.6% for the second quarter of 2025. The consensus expects the “Mag7” to post a double-digit percentage increase. If the Septet is excluded from the earnings estimate for the leading US index, the expected growth rate for the second quarter shrinks to 3.4%. This correlation shows that Wall Street has hot days ahead of it.

This evening after the close of trading in New York, Tesla and Alphabet. In the case of the e-car group, the focus is likely to be on the consequences of CEO Elon Musk’s political activities. Alphabet’s figures and outlook, on the other hand, should provide an insight into the state of the global economy and the status and potential of several megatrends. Internet, media, cloud and, last but not least, artificial intelligence (AI) – the Google parent company is setting the pace in these areas. Due to its strong links to the macroeconomy in general and the technological environment in particular, the company, which is worth almost USD 2.3 trillion, is also known as “Dr. Google”.

Competition and justice breathing down our necks

Alphabet’s bread and butter business is Google. In the first quarter, the search engine generated advertising revenues totaling USD 66.9 billion. The growth of 8.5% was well above Wall Street’s expectations. Alphabet has benefited from its foray into AI at this point. The search overview “AI Overview” introduced by the company now has 1.5 billion users per month. At the same time, Alphabet is joining the AI race with its chatbot “Gemini”. But the competition is not sleeping. Start-ups such as OpenAI and Perplexity are now vying for the global flock of internet users with their own browsers. Google’s enormous supremacy is also under threat from the judiciary. Efforts are underway in several countries to bring Alphabet to more competition in online search or even to break up the internet colossus. This also applies to the domestic market; last August, Google was classified as a monopoly by a US court.

The ongoing proceedings are likely to be a topic when Alphabet management around CEO Sundar Pichai speaks in a webcast today from 10:30 pm our time. As far as the figures are concerned, analysts are assuming on average that the Group increased revenue by 11% in the second quarter. While the consensus for advertising revenue assumes an increase of 7.5%, the bar is much higher in the cloud segment, where Wall Street expects growth of 26.2%. The average analyst expectation for earnings per share in the second quarter is USD 2.18. If the experts are right, Alphabet would announce a 15.3% increase in earnings.

Investment idea

Over the past few days, anticipation has spread on Wall Street. In any case, Alphabet shares climbed to their highest level for more than five months. At the beginning of February, the mega cap reached an all-time high of USD 208.70. Later, the stock market turbulence triggered by US trade policy and the uncertainties associated with the antitrust disputes led to a stronger correction. From a technical perspective, Alphabet is now in the process of overcoming the horizontal resistance at USD 190. If it succeeds in this endeavor, the round USD 200 mark would come into focus. This is precisely where the strike of the call warrant lies GOONJB. Prior to the payment date, this security was among the most traded warrants at Julius Baer. The out-of-the-money call runs until March 20, 2026 and currently has a leverage of 5.5. Caution: If Alphabet turns down, there is a risk of disproportionately high losses.