Alphabet Inc. (GOOGL) has continued its rally into May, with shares recently trading above $165, rebounding from April lows and outpacing short-term moving averages.
This uptick follows a robust first-quarter earnings report, where Alphabet posted a 12% year-over-year revenue increase to $90.2 billion, a 46% jump in net income, and strong double-digit growth across Google Search, YouTube ads, and Google Cloud.
The company’s operating margin expanded to 34%, and a 5% dividend hike signaled management’s confidence in future cash flows.
Despite this positive momentum, Alphabet’s stock remains about 13% below its 52-week high of $207.05, reflecting persistent investor caution. The primary factor limiting further upside is mounting legal pressure.
Over the past year, Alphabet has lost two high-profile antitrust cases-one targeting its search monopoly and another its digital advertising business. These legal setbacks have raised concerns about potential regulatory remedies that could impact Alphabet’s core revenue streams or force changes to its business model.
Additionally, broader market volatility and digital ad spending concerns-exacerbated by recent tariff announcements-have weighed on the stock. Even so, Alphabet’s valuation has become more attractive, with its price-to-earnings ratio now the lowest among major digital advertising peers, suggesting potential value for long-term investors.
Looking ahead, investors are watching key events in May, including the Google I/O developer conference and Google Marketing Live, for updates on artificial intelligence initiatives. With a planned $75 billion in capital expenditures for 2025-much of it aimed at AI infrastructure-Alphabet is doubling down on innovation to drive future growth.
While legal and regulatory headwinds are likely to linger, analysts remain optimistic about Alphabet’s ability to navigate these challenges, citing its wide economic moat, diversified revenue base, and strong free cash flow.
For now, legal uncertainty and weak trading volumes may cap near-term gains, but the company’s fundamentals and AI-driven strategy position it well for long-term value creation.