Alphabet Inc.

Alphabet Inc. (NASDAQ: GOOGL) operates as a holding company with three primary segments: Google Services, Google Cloud, and Other Bets. The Google Services division encompasses a wide range of products and offerings, including advertising, Android, Chrome, hardware devices, Google Maps, Google Play, Search, and YouTube.

As per our previous Kalkine’s Global AI and Emerging Market Report published on ‘GOOGL’ on 5^th Mar, 2025, Kalkine provided an ‘Buy’ stance on the stock at USD 170.92 based on fundamental analysis and the stock price has now moved up by ~ 17.84% since then and has breached resistance level 2.

Noted below are the details of support and resistance levels provided in our previous report:

Rationale – Sell at USD 201.42

• Slight Revenue Pressure in Google Network and Hedging Losses: Alphabet experienced a marginal decline in Google Network revenues, falling from USD 7.44 billion in Q2 2024 to USD 7.35 billion in Q2 2025, suggesting ongoing challenges in certain advertising channels. Additionally, the company recorded a hedging loss of USD 112 million in Q2 2025 compared to a USD 102 million gain in the prior-year quarter, indicating negative currency-related impacts that reduced overall financial benefits from global operations.
• Higher Traffic Acquisition Costs (TAC): Traffic Acquisition Costs rose from USD 13.39 billion in Q2 2024 to USD 14.71 billion in Q2 2025, reflecting a 9.8% increase. This rise in TAC puts pressure on advertising margins, as Alphabet continues to spend more on acquiring traffic for its Google Search and advertising products. Sustained TAC growth could weigh on profitability if not offset by proportionately higher revenue gains.
• Increased Losses in Other Bets Segment: The Other Bets segment, which includes Alphabet’s experimental and non-core businesses, reported a higher operating loss of USD 1.25 billion compared to USD 1.13 billion in Q2 2024. This widening loss indicates that these ventures continue to consume resources without contributing meaningfully to the company’s bottom line, raising concerns about the pace of commercialization and profitability in these projects.
• Rising Costs at the Alphabet-Level Activities: Operating losses from Alphabet-level activities expanded significantly to USD 3.37 billion in Q2 2025 from USD 2.29 billion a year earlier. This category includes charges related to employee severance and office space, highlighting ongoing restructuring and expense pressures. Such cost escalations, if persistent, could partially offset efficiency gains achieved elsewhere in the business.

Valuation (Using EV/Sales Multiple)

Share Price Chart  

Conclusion

Alphabet’s Q2 2025 performance, while strong in revenue growth, was tempered by certain headwinds. Google Network revenues saw a slight decline, and the company recorded a USD 112 million hedging loss versus a prior-year gain, reflecting currency pressures. Rising Traffic Acquisition Costs, up nearly 10% year over year, signaled higher spending to maintain ad reach, while operating losses in the Other Bets segment widened, underscoring continued drag from non-core ventures. Additionally, Alphabet-level activities incurred significantly higher costs from severance and office space charges, further straining operational efficiency.

Based on the notional gains, valuation downside and price action stance, a "Sell" recommendation on Alphabet Inc. (NASDAQ: GOOGL) has been given at the closing market price of USD 201.42 as on 08 August 2025.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 08 August 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.