Alphabet's (GOOGL -0.15%) (GOOG -0.14%) most recent financial report was well received by investors. The business reported revenue of $74.6 billion and diluted earnings per share of $1.44, which handily beat Wall Street expectations. It's no wonder the stock popped following the announcement. 

This continues the stock's strong momentum. Shares have crushed the Nasdaq Composite Index this year, soaring 50% through the first seven months of 2023. 

Is it time for investors to scoop up this trillion-dollar company right now? 

Glimmer of hope 

When the Federal Reserve started on its path of aggressively hiking interest rates early in 2022, economists predicted that a recession was imminent. Trying to pump the brakes on the economy, which was dealing with hot inflation, would certainly lead to a downturn, they thought. 

This led executives across the corporate landscape to cut back on marketing spending, with the expectation that consumer demand would be pressured. Why spend more money on advertising when your customer base might be struggling and directing more of their discretionary dollars to essential items? 

In Q4 2022, Alphabet's advertising revenue declined 4%. And it fell again slightly in the first quarter. 

But the most recent three-month period, when digital ad revenue posted a 3% year-over-year gain, showed that Alphabet's bread-and-butter business driver is accelerating, hopefully to more normalized growth levels. 

With financial experts continually lowering their projected chances of a recession this year, perhaps ad spending is set to keep increasing at faster rates in the next few quarters. With ad revenue accounting for 78% of overall company-wide sales in Q2, this will obviously bode well for Alphabet. 

Picking up the slack 

Whereas advertising revenue gains for Alphabet remain in the single digits, Google Cloud Platform (GCP) is thriving. The cloud services segment, which provides services like computing, data storage, and AI tools, generated sales of $8 billion last quarter, good for a 28% increase compared to Q2 2022. This growth rate was about in line with the previous quarter. 

A key trend that shareholders should keep a close eye on is GCP's improving financial situation. The segment finally generated positive operating income in the first quarter this year. The operating margin expanded to 5% in the most recent three-month period. If GCP can one day get to the 28% operating margin that Amazon Web Services put up in 2022, expect profitability for Alphabet to expand substantially over the years. 

With estimates that the global cloud market can become a massive $2.4 trillion opportunity by 2030, GCP is in a very favorable spot to remain a leader in the industry far into the future. According to Statista, it is currently in third place. And with tremendous financial resources and access to top-tier tech talent, Alphabet and GCP can continue investing in improving the service for current and future customers. 

Analyzing the valuation 

Even after the stock's monumental rise in 2023, it's still attractively priced. Shares currently trade at a trailing price-to-earnings (P/E) ratio of 28, below the 10-year average P/E multiple of 30.6. Because net income is expected to grow, the forward P/E ratio looks even better at 23.9. That should be enough of a reason to want to buy this dominant enterprise. 

As of June 30, Alphabet had $118 billion of cash, cash equivalents, and marketable securities on the balance sheet. The long-term debt balance was just $14 billion. Take this financial position, coupled with the fact that the business consistently generates a ton of free cash flow, and investors should quickly realize Alphabet is a safe stock to buy and hold.