To The Moon

Judgemental Analysis: Google Q2 2025 Earnings — Is Alphabet the Most Undervalued Tech Titan?

Earnings season is here again, and all eyes are on the usual suspects: the “Magnificent Seven” tech giants. But among these, Google — or more accurately, Alphabet Inc. — stands out for reasons both exciting and, frankly, puzzling. As the company prepares to release its Q2 2025 earnings report after the market closes on July 23, the consensus is almost comically bullish. Revenue projections are sky-high at $93.75 billion, and profit margins are expected to expand. The forecast for diluted EPS is a respectable $2.25. From a valuation standpoint, analysts peg Google’s fair value at $185 per share based on an EV/EBITDA multiple of 13.55x for fiscal 2026. Yet, in a market that endlessly rewards hype, Google is trading at a discount to nearly every peer — and in many ways, to its own potential. Is this just market myopia, or is something genuinely wrong under the hood? Should investors rush to buy, or is caution still warranted?

Let’s cut through the platitudes and look at Google with an appropriately judgemental lens.

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The Case for Optimism: Google’s Fundamentals Are (Still) Ridiculous

First, the bullish case. If you strip away the noise, Google is the most dominant digital advertising company on earth, by a country mile. YouTube is a cultural institution and a money machine. Search has no real rival, even after decades of “Google killers.” Android is the world’s most widely used OS. Google Cloud, though late to the game, is finally finding its stride — growing faster than both AWS and Azure in percentage terms. And all of this sits atop the biggest, most valuable data empire ever assembled.

These aren’t just nice bullet points for an earnings deck. They are the core drivers behind Google’s absurd free cash flow — nearly $100 billion last year. Most companies would kill for just a sliver of Google’s scale, network effects, or R&D firepower.

Now, with Q2’s report, the setup is even sweeter. The digital ad market is rebounding, AI investments are (finally) beginning to translate into new monetisation streams, and regulatory overhangs (while annoying) have largely been baked into the stock price. Profit margins are forecast to improve, with aggressive cost-cutting from last year bearing fruit. Cloud continues to take market share, and YouTube Shorts is siphoning off TikTok’s user growth. This quarter, all the engines are firing.

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But Let’s Be Judgemental: Why Is Google Still “Cheap”?

With all this good news, why is Google still valued so conservatively compared to its peers? Apple and Microsoft trade at eye-watering multiples; even Meta and Amazon command premiums on the expectation of future dominance. Google, in contrast, sits unloved in the corner, sporting an EV/EBITDA multiple around 13.5x for next year. Is the market just blind — or is there a rational explanation?

There are three judgemental answers:

1. The AI Narrative Has Passed Google By (For Now):

While Google basically invented modern AI (TensorFlow, Transformer models, DeepMind, etc.), its public narrative around artificial intelligence has been muddled, reactive, and, at times, almost apologetic. Microsoft and OpenAI have captured the cultural zeitgeist with ChatGPT, while Google’s Bard and Gemini rollouts have been overshadowed by controversy, layoffs, and odd “AI Overviews.” For investors who want to bet on the AI revolution, Google has, so far, failed to generate the same urgency and FOMO as its rivals.

2. Regulatory and Legal Baggage:

Google is perpetually in the crosshairs of regulators, from antitrust lawsuits in the US to privacy fines in the EU. The market hates uncertainty, and Google’s endless parade of courtroom battles create a chronic drag on sentiment. While these fines and settlements are (for now) rounding errors on the P&L, the spectre of forced breakups or limits on core businesses lingers.

3. The “Fat Company” Syndrome:

Let’s be honest — Google is massive, bureaucratic, and sometimes slow-moving. A company this size can’t pivot like a startup, and their culture of experimentation occasionally leads to waste (anyone remember Google+, Stadia, or endless chat app graveyard?). Investors have learned not to expect wild outperformance — just steady, sometimes boring, dominance.

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So — Is Google Undervalued?

Here’s the heart of it: Google is undervalued only if you believe the future will look even remotely like the present.

If you believe digital advertising isn’t going away, that search will remain the web’s front door, that AI is an incremental (not existential) risk, and that regulatory headwinds won’t meaningfully disrupt the core business — then yes, Google at $185 per share (or lower, on any dip) is one of the few “fat pitches” left in big tech. At 13.5x EV/EBITDA, you get a bulletproof balance sheet, fortress-like moats, and an optionality lottery ticket on whatever new thing DeepMind cooks up next. Compared to the froth in AI stocks, it’s almost embarrassing how cheap Google is.

But — and this is critical — Google’s undervaluation is not just a market oversight. It’s a judgement on the company’s ability to keep pace in a world where perception is everything. For the stock to re-rate higher, Google needs to change its story. It needs to prove it can out-AI the competition, out-grow the ad market, and out-innovate its own bureaucracy. If management continues to play defense, this “value” could persist indefinitely.

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Earnings Day: What Matters Most

The July 23 earnings call will be a verdict not just on the past quarter, but on the company’s ability to convince the world it still has a pulse. Here’s what matters:

• Revenue Growth: Investors want to see high single-digit or better revenue growth, especially in Cloud and YouTube.

• Margin Expansion: Expense discipline must show up in real, expanding profit margins.

• AI Progress: More than a laundry list of new models, Wall Street needs to hear about productised AI that drives revenue and market share.

• Regulatory Updates: Any sign that the legal overhang is clearing will help sentiment.

• Share Buybacks: Google’s cash hoard is enormous. Aggressive buybacks signal confidence.

If Google delivers on these, the market may finally start to close the valuation gap.

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Jump on the Wagon? Final Judgement

Let’s be brutally honest. The market loves a comeback story, and Google is perfectly set up for one. Low expectations, strong fundamentals, a manageable valuation, and a quietly resurgent ad and cloud business — this is classic “buy the laggard” territory for anyone with a time horizon longer than next week. The big risk isn’t that Google collapses — it’s that it stays boring. For value investors, boring is good. For momentum chasers, boring is fatal.

So yes — I am optimistic about Google’s earnings. I believe the company is undervalued by almost any rational metric. The market, for now, is punishing Alphabet for sins real and imagined, but at some point, narrative catches up with reality. When that happens, the rerating could be sudden and dramatic.

The real danger is not in being too early to Google — it’s in ignoring it entirely while chasing shinier, riskier things. Jump on the wagon before the crowd remembers how unstoppable this business truly is.

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In Summary:

Google’s Q2 earnings aren’t just another checkpoint — they’re a referendum on whether the world’s most powerful tech company still gets the respect (and valuation) it deserves. My judgement: the opportunity is real, the risks are overblown, and Alphabet, in this market, is the closest thing to a value play among giants. If you want growth with a margin of safety, there’s only one real question: what are you waiting for?