Google's $75 Billion Investment Plan Raises Eyebrows Amid Stock Slump, But Cloud Growth Fuels Optimism

As of last week, Google C (GOOG) experienced a 2.71% decline, marking a two-day losing streak with a cumulative drop of 2.97%. Over the past week, the stock fell 3.35%, and year-to-date it has seen a decline of 4.65%, bringing its latest market capitalization to $2,213.46 billion. On February 21, 2025, Google C, an Interactive Media & Services company, saw a trading volume of $3.577 billion, ranking 19th among US stocks for that day. The trading volume for the day was 19.52 million shares, marking a 59.26% increase from the previous day.

Google C (GOOG) closed on February 21, 2025, at $181.58, reflecting a 2.71% drop. Over the past five trading days, the stock has decreased by 2.83%. Throughout February, Google's stock has experienced an 11.68% decline, although it has climbed 24.98% over the past 52 weeks.

Alphabet Inc., Google's parent company, was established in 2015 following a corporate restructuring. Initially founded in 1998 in California, Google reincorporated in Delaware in 2003. Alphabet's diverse business segments span technology, life sciences, capital investment, and research, with subsidiaries including Google, Calico, GV, Google Capital, and Google Fiber. Google specializes in internet search, cloud computing, and advertising technologies, delivering a wide range of internet-based products and services.

On February 18, 2025, Google C (GOOG) was traded with a volume reaching $3.665 billion, being 15th in US stock trading that day. The stock price closed at $185.80, posting a 0.57% decline. Google C's five-day trading span saw a 0.68% decrease, with a 9.63% fall in February, although it has experienced a 31.07% rise over the past year.

Google's recent earnings report triggered a pullback in stock value due to revenue not meeting expectations. Wall Street was surprised by the announcement of a significant capital expenditure increase to $75 billion, raising questions about whether such rapid investment could be turned into prudent commercial success. Nonetheless, Google's expansion, particularly through ventures like Waymo, indicates a growth trajectory, with potential rollouts in metropolitan markets expected in the coming months. A comparison between Waymo's service and Tesla's upcoming Robotaxi could sway investor optimism if Waymo's performance is favorable.

Google's cloud services division has also shown strong year-over-year growth, with profit margins expanding robustly. Currently trading at 18.2 times expected earnings per share for the fiscal year ending December 2026, Google presents an appealing option within the MAG 7 tech group due to its lower price earnings ratio compared to peers.

The market altered its sentiment toward Google following the latest financial disclosures, primarily because of the $75 billion capital investment plan for 2025, exceeding forecasts by approximately 30%. There is widespread concern about the management's ability to judiciously allocate these funds for satisfactory returns.

Despite skepticism, Google's search revenue has posted a significant 12.5% year-over-year increase in recent months, reflecting its resilience against competitive threats from emerging AI technologies. The cloud sector reported $11.95 billion in revenue for the quarter, a 30% increase from the previous year, albeit slightly under expectations. However, the operating margin for Google Cloud expanded substantially.

Experts forecast Google's continued advancement in the telecom and AI industry, aided by cost-effective AI models and improved large language models. Google's ability to streamline capital expenditure and enhance profitability may soon give its stock a favorable wind.