Alphabet Surges on Q3 Earnings Beat: ETFs to Watch

Alphabet GOOGL came up with better-than-expected third-quarter earnings on Oct. 29 after market close. Earnings of $2.87 per share surpassed the Zacks Consensus Estimate of $2.26 by 26.99%. This marked an improvement of 35.38% from earnings of $2.12 per share recorded in the same period last year.

2025 is shaping up to be a strong year for the tech giant after a volatile first half. Alphabet’s stock has gained nearly 45% year to date and about 12% over the past month. Markets responded positively to the company’s third-quarter earnings, with shares of GOOGL surging about 7.85% during pre-market hours on Oct. 30.

According to Reuters, robust AI-driven demand fueled Alphabet’s latest results, as strength in both its advertising and cloud segments pushed revenues above expectations.

Even amid market chatter about an AI bubble, the company lifted its capital spending outlook to between $91 billion and $93 billion for the year. According to Sundar Pichai, Alphabet’s CEO, the tech giant is investing to address increasing customer needs and capture growing opportunities company-wide, as quoted on the company’s earnings release.

Snapshot of Q3 Earnings

The tech giant posted revenues of $87.47 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate of $84.96 billion by 2.95%. This marked a substantial increase of 17.33% from the year-ago quarter.

Alphabet’s net income for the quarter saw a substantial surge of 32.99% from the year-ago quarter to $34.98 billion. The company’s operating income was $31.23 billion, which marked an increase of 9.49% from the year-ago quarter.

However, according to the earnings release of Alphabet, when excluding the $3.5 billion EC fine, Alphabet’s operating income jumped 22%, and margins expanded to 33.9%, reflecting solid top-line growth and tighter cost controls.

Segment Snapshots

Third-quarter revenues from Google advertising reached $74.18 billion, up 12.65% from the year-ago quarter. Revenues from YouTube ads, which reached $10.26 billion in the third quarter, marked a rise of 15.02% from $8.92 billion in the year-ago quarter.

Alphabet’s Google Cloud business witnessed a substantial surge, with operating income increasing to $3.59 billion, an impressive 84.59% increase from the prior-year figure of $1.95 billion. Revenues from the Cloud segment also witnessed a substantial rise of 32.98% year over year to $15.16 billion, driven by growth in Google Cloud Platform (GCP) across core products, AI Infrastructure and Generative AI Solutions.

Revenues from Google Services for the quarter increased 13.78% from the year-ago quarter, reaching $87.05 billion. Per the earnings release of the tech giant, Google Search & Other, YouTube ads, Google Cloud and the company’s subscriptions, platforms, and devices businesses delivered double-digit revenue growth in the quarter ended September 2025.

Alphabet’s Stock Outlook

Alphabet currently has an average brokerage recommendation (ABR) of 1.40 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 57 brokerage firms. The current ABR compares to an ABR of 1.41 a month ago, based on 56 recommendations.

Of the 57 recommendations deriving the current ABR, 43 are Strong Buy and five are Buy. Strong Buy and Buy, respectively, account for 75.44% and 8.77% of all recommendations. A month ago, Strong Buy made up 75%, while Buy represented 8.93%, indicating that the majority of the analysts remain bullish.

GOOGL, which belongs to the Zacks Internet - Services industry, has a Zacks Rank #3 (Hold).

ETFs to Explore

Here, we have highlighted ETFs with heavy exposure to Alphabet.

Global X PureCap MSCI Communication Services ETF GXPC

Global X PureCap MSCI Communication Services ETF seeks to track the performance of MSCI USA Communication Services Index with a basket of 24 securities. The fund has amassed an asset base of $33.1 million and charges an annual fee of 0.15%.

Global X PureCap MSCI Communication Services ETF has an exposure of 25.69% in GOOGL.

Fidelity MSCI Communication Services Index ETF FCOM

Fidelity MSCI Communication Services Index ETF seeks to track the performance of MSCI USA IMI Communication Services 25/50 Index with a basket of 105 securities. The fund has amassed an asset base of $1.86 billion and charges an annual fee of 0.08%.

Fidelity MSCI Communication Services Index ETF has an exposure of 14.53% in GOOGL.

Vanguard Communication Services ETF VOX

Vanguard Communication Services ETF seeks to track the performance of the MSCI US Investable Market Communication Services 25/50 Index with a basket of 121 securities. The fund has amassed an asset base of $5.83 billion and charges an annual fee of 0.09%.

Vanguard Communication Services ETF has an exposure of 14.52% in GOOGL.

IShares Global Comm Services ETF IXP

IShares Global Comm Services ETF seeks to track the performance of the S&P Global 1200Communication Services 4.5/22.5/45 Capped Index with a basket of 69 securities. The fund has amassed an asset base of $876.7 million and charges an annual fee of 0.40%.

IShares Global Comm Services ETF has an exposure of 13.61% in GOOGL.

Communication Services Select Sector SPDR Fund XLC

Communication Services Select Sector SPDR Fund seeks to track the performance of the Communication Services Select Sector Index with a basket of 24 securities. The fund has amassed an asset base of $26.99 billion and charges an annual fee of 0.08%.

Communication Services Select Sector SPDR Fund has an exposure of 9.75% in GOOGL.

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This article originally published on Zacks Investment Research (zacks.com).

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