Q3 results smash expectations
In late October, Alphabet reported quarterly results that smashed expectations. The company posted revenue of approximately US$102.35 billion for the quarter, up around 16% year-on-year (YoY).
Adjusted earnings per share (EPS) of about US$3.10 came in well ahead of the ~$2.26 consensus, demonstrating strong operational leverage.
Its cloud division recorded revenue of around US$15.16 billion (growth of roughly 34%) and the advertising business also posted strong growth (ads revenue ~US$74.18 billion).
In that context, Alphabet raised its capital-expenditure guidance for 2025 to US$91-93 billion, reflecting the company’s massive investment in AI infrastructure.
Regulatory victory removes major overhang
On the regulatory front, Alphabet scored a major win in early September when a US court ruled that the company would not be forced to divest its Chrome browser or Android operating system.
Despite acknowledging antitrust violations, the decision removed a major legal overhang that had weighed on investor sentiment.
The ruling contributed to an instant ~8% share-price rally as investors reassessed the company’s prospects without the threat of forced divestitures.
The combination of strong operational execution and regulatory relief has driven investor sentiment to levels not seen in years.
Valuation concerns emerge at elevated levels
The question now is whether Alphabet can sustain momentum and justify its 31.43 price to earnings (P/E) ratio and the valuation that its share price rally implies.
Some analysts caution that despite its lofty position, the company’s valuation may already reflect much of the future upside.
According to LSEG Data & Analytics, Alphabet has a ‘buy’ rating with a mean long-term price target at $307.98, around 5% below the current share price (as of 26/11/2025).