Alphabet (GOOG) surprised a lot of investors with more than stellar results.

Folks, don't forget this is a $400Bn revenue company not supposed to be growing at 16%!

I have recommended and bought Alphabet on several occasions, even as recently as Oct 15t, 2025 $248.50 - this is the most undervalued stock in the M-7, and the markets have not valued Waymo properly.

Q3-2025 A gung-ho quarter

Google Cloud, once a distant third, now has more than a seat at the table:  It's revenues increased 34% to $15.2 billion, led by growth in Google Cloud Platform (GCP) across core products, AI Infrastructure and Generative AI Solutions. Its backlog is a massive $155Bn.Google cloud platform has bagged more billion-dollar deals in the first nine months of 2025 than in the prior two years.

• Older but still fleet of foot: Company wide revenues increased 16%, YoY to $102.3Bn V consensus analysts estimate of $100B.
• No man left behind: Google Search & other, YouTube ads, Google subscriptions, platforms, and devices, and Google Cloud all delivered double-digit growth in Q3.
• Google Services revenues increased 14% to $87.1Bn
• Operating income increased 9% and operating margin was 30.5%. Excluding the $3.5 billion charge related to the European Commission (EC) fine, operating income increased 22% and operating margin was 33.9%, benefitting from strong revenue growth and continued efficiencies in the expense base.
• Adjusted operating income increased 22% and operating margin was 34%.
• Other income reflected a net gain of $12.8 billion, primarily the result of net unrealized gains on our non-marketable equity securities.
• A massive beat: Net income increased 33% and EPS increased 35% to $2.87.V estimate of $2.26

Capex $91Bn to $93Bn - higher than $85Bn forecast, but still substantially better compared to Meta, Microsoft and Amazon. While analysts often fear return on high capital expenditures, Alphabet seems to be in reason, unlike Meta, which was hammered 10% after CEO, Zuckerberg forecasted close to 60% Capex increases next year. Further, Alphabet generates about $120Bn worth of operating cash each year, I would rather see them spending more on growth than buybacks.

I'm very impressed that Search increased 15%, especially with ChatGPT, Perplexity, Claude and Grok breathing down their necks.

Gemini ended the quarter with 650Mn subscribers.

Alphabet's CEO, Sundar Pichai had this to offer

Alphabet had a terrific quarter, with double-digit growth across every major part of our business. We delivered our first-ever $100 billion quarter. Our full stack approach to AI is delivering strong momentum and we’re shipping at speed, including the global rollout of AI Overviews and AI Mode in Search in record time. In addition to topping leaderboards, our first party models, like Gemini, now process 7 billion tokens per minute, via direct API use by our customers. The Gemini App now has over 650 million monthly active users. We continue to drive strong growth in new businesses. Google Cloud accelerated, ending the quarter with $155 billion in backlog. And we have over 300 million paid subscriptions led by Google One and YouTube Premium. We are investing to meet customer demand and capitalize on the growing opportunities across the company. Waymo clearly is scaling up, particularly in 2026. I think the possibility... of Gemini... with the multimodal experience as well as services like YouTube, I think there's a real opportunity to make the in-car experience dramatically better.

Philipp Schindler, SVP & Chief Business Officer of Google, shared,

“Google Services revenues were $87 billion for the quarter, up 14% year-on-year driven by accelerated growth in Search and YouTube.” He highlighted AI Max in Search as “the fastest-growing AI-powered search ads product,” and noted, “In Q3 alone, AI Max unlocked billions of net new queries.”

Wall Street loved the results with these comments, posted on Seeking Alpha:

Truist Securities maintained Buy with a price target increase to $320 from $285:

The results topped Street expectations across virtually all revenue lines. Search revenue accelerated on a quarter-over-quarter basis even amid AI competition”

Barclays - Overweight with a price target increase from $250 to $315:

Alphabet saw each of its key revenue streams accelerate in 3Q on the back of AI tailwinds across the entire business, and a solid digital advertising industry backdrop.If the company can shrug off AI competitive threats to Search in '26, we think shares can continue to work higher

Stifel - Buy

Google Cloud backlog was $155B, which represents a significant year-over-year growth acceleration vs. 2Q25. Alphabet continues to drive growth at scale through strength in mobile search, YouTube, and programmatic advertising, while investing in other key initiatives (cloud, hardware, AI) that should serve as multi-year growth levers.