Why Alphabet Stock Plunged 22% in the First Quarter

Source Motley_fool

Shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) fell 22.1% in the first quarter of 2025, according to data from S&P Global Market Intelligence. Google's parent company saw a disappointing fourth-quarter report and the same tariff-based issues as everyone else.

How Google's Q4 report caused a market retreat

Let's start with the earnings debacle.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Alphabet's Q4 report was a mixed bag, with solid bottom-line earnings but revenues just below the consensus analyst target. The Google Cloud business struggled a bit, while YouTube and search-based sales came in above expectations. But the stock closed 7.3% lower the next day, mostly due to high expectations from this holiday-quarter report.

The soft Google Cloud sales sprung from one of the nicest problems a company can have: Customer demand for Alphabet's artificial intelligence (AI) services is too high, and it's difficult to build out the supporting infrastructure fast enough. In response, Alphabet will boost its capital expense budget to $75 billion in 2025, 43% above last year's total. The extra dollars are earmarked for data centers and engineering assets in the AI space.

Some investors see nothing but lower free cash flows in that accelerated AI spending spree. Combined with mixed headline-figure results, that was enough to send Alphabet's stock dramatically lower, erasing December's boost from an impressive quantum computing achievement.

Looking way beyond one challenging quarter

Alphabet shares have largely followed the broader market's swings in the last year, though its swings to the upside and downside have been a bit exaggerated.

As a leader in next-generation technology areas such as generative AI, quantum computing, and self-driving vehicles, the company should outperform Wall Street's general trajectory in the long run. Alphabet's vote-endowed Class A stock has seen a compound average growth rate (CAGR) of 20.1% over the last five years, far ahead of the S&P 500 (SNPINDEX: ^GSPC) index's 15.5% CAGR in the same period.

That's the type of market-beating returns I expect from Alphabet in the long haul. This company was built for flexibility, always ready to roll with the market's punches and take the lead in most of the generation-switching sea changes along the way. It's not always smooth sailing, and the stock needs a quick correction when it soars too high, but that's not a problem right now.

Long story short, Alphabet stock looks like a great buy after a significant price drop in the first quarter.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $35,715!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $461,558!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of April 5, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold Price Forecast: XAU/USD retreats further from all-time highs of $3,245 Gold price is back in the red early Monday, snapping a three-day record rally to lifetime highs of $3,245 set on Friday.    
Author  FXStreet
4 Month 14 Day Mon
Gold price is back in the red early Monday, snapping a three-day record rally to lifetime highs of $3,245 set on Friday.    
placeholder
Bitcoin Price Holds Steady, But Futures Sentiment Signals Caution – DetailsAccording to a recent CryptoQuant Quicktake post, while Bitcoin (BTC) has seen a steady rise in price from November 2024 to February 2025, sentiment in the cryptocurrency’s futures market has
Author  NewsBTC
4 Month 17 Day Thu
According to a recent CryptoQuant Quicktake post, while Bitcoin (BTC) has seen a steady rise in price from November 2024 to February 2025, sentiment in the cryptocurrency’s futures market has
placeholder
Bitcoin Continues To Flow Out Of Major Exchanges — Supply Squeeze Soon?It was quite the coincidence that the cryptocurrency market jolted back to life after Easter Sunday, with Bitcoin leading the way with more than a double-digit gain. While the price of BTC continues
Author  NewsBTC
4 Month 27 Day Sun
It was quite the coincidence that the cryptocurrency market jolted back to life after Easter Sunday, with Bitcoin leading the way with more than a double-digit gain. While the price of BTC continues
placeholder
Altcoins to watch this week: ALGO and BCH show potential for double-digit rallyAlgorand (ALGO) and Bitcoin Cash (BCH) prices stabilize around $0.22 and $368, respectively, at the time of writing on Tuesday, following a rally of over 4% the previous day.
Author  FXStreet
4 Month 29 Day Tue
Algorand (ALGO) and Bitcoin Cash (BCH) prices stabilize around $0.22 and $368, respectively, at the time of writing on Tuesday, following a rally of over 4% the previous day.
placeholder
Monero (XMR) Price Jumps 50% Amid ‘Suspicious’ $330 Million BTC Transfer – DetailsAn analyst has suggested that Monero (XMR) could repeat its 2021 cycle-high amid its recent price jump. However, a renowned on-chain sleuth has linked the surge to suspicious Bitcoin (BTC)
Author  NewsBTC
4 Month 29 Day Tue
An analyst has suggested that Monero (XMR) could repeat its 2021 cycle-high amid its recent price jump. However, a renowned on-chain sleuth has linked the surge to suspicious Bitcoin (BTC)
goTop
quote