Alphabet earnings loom as Google Cloud's $20B quarter has investors betting big; stock is a must-buy before July 22

Alphabet's second-quarter earnings report on July 22 is set against a backdrop of impressive growth in its Google Cloud division, which generated approximately $20 billion in revenue last quarter, marking a 63% increase.¹³

Investors are particularly focused on this segment, as its operating income exploded 203%.

With a backlog of contracted future revenue ballooning to nearly $462 billion, Alphabet's cloud business is becoming a critical driver of its overall performance.⁶

Despite trading at 25 times forward earnings, Alphabet's stock is considered attractively valued compared to its big tech peers.⁵

Analysts suggest that if the company reports a blowout quarter, the stock could see a valuation increase to 30 times forward earnings, representing a potential 20% upside.

Management has also raised full-year guidance to a range of $180 billion to $190 billion, indicating confidence in future growth.

However, the advertising business, while still dominant with $77.3 billion in Q1 revenue, is becoming less central to the earnings narrative.

As noted by The Motley Fool, Alphabet's stock performance may increasingly hinge on the success of its cloud division rather than its advertising revenue.

Investors are keenly aware of the company's significant capital expenditures projected to hit $185 billion by 2026, as Alphabet invests heavily in infrastructure to support its AI ambitions.⁷

With share buybacks suspended to redirect cash toward these initiatives, the market is watching closely to see if Google Cloud can maintain its growth trajectory amidst rising costs.