On the surface, the Q2 report from Alphabet Inc (NASDAQ:GOOGL) looks like an absolute blowout. Alphabet earnings crushed Street consensus – by over $2 per share. Revenue was ahead of expectations as well. Google stock spiked in after-hours trading, gaining as much as 5% before closing up 3.6% in the late session.

Certainly, Q2 was a strong quarter for Alphabet. I’ve been cautious on Google for some time. In fact, I’ve been too cautious, as the stock is likely to reach another all-time high in regular trading Tuesday.

Still, it’s worth noting that the Alphabet earnings beat wasn’t quite as big as headline numbers suggest. And some of the concerns that skeptics like myself have highlighted over the past few years haven’t totally been answered.

The Google Stock Earnings Beat

Simply from the headline numbers, Alphabet earnings look something close to spectacular. Revenue rose over 25% year over year a huge growth rate for a company Alphabet’s size.

It’s really only Alphabet, Amazon.com (NASDAQ:AMZN) and Facebook (NASDAQ:FB) who can offer that type of growth off such a base, and Facebook’s revenue is less than half that of Alphabet’s. The 25.6% increase was about two points better than analysts estimated.

Earnings look even more spectacular. Excluding the impact of accruals for the company’s $5 billion fine from the EU (in addition to a $2 billion-plus penalty the year before), EPS rose 32% year over year. At $11.75, the figure crushed Street expectations by $2.21.

The short version of the bull case coming out of Q2, then, looks pretty simple. Google stock at the after-hours price of $1,255 is trading at about 23x 2019 EPS estimates. It just grew revenue 25% and EPS 30%+. That combination looks attractive in any market, let alone one only a couple of percentage points off all-time highs.

There’s some truth to the bull case. But there are also some potential concerns still lurking beneath the sterling headline numbers.

The Google Stock Investment Boost

It’s worth noting that as impressive as the EPS growth, in particular, sounds, much of the 30%+ increase didn’t come from the underlying business. A lower tax rate had an impact; total income tax expense actually declined year-over-year, by roughly $0.14, boosting EPS growth by about 5%.

But the bigger boost came from the company’s equity securities. Other income, on a net basis, rose from $245 million in Q2 2017 to $1.408 billion in Q2 2018. As MarketWatch detailed, Google’s savvy investments were a major factor.

Under a new accounting standard, Google was able to take gains on publicly traded securities. The IPOs of DocuSign (NASDAQ:DOCU) and Zscaler (NASDAQ:ZS) contributed much of the increase.

Google also didn’t pay any taxes on those gains, owing to deferred tax assets. So, per the Q2 release, the investments provided a benefit of $1.17 – more than half the consensus beat and over 40% of Alphabet’s year-over-year boost. On the whole, nearly half of Google’s EPS growth came from factors outside the underlying business.

The Good News and Bad News for Google Stock

Of course, that still means that a company with $110 billion in revenue and ~$30 billion in net profit grew earnings about 17% year-over-year. That’s a heckuva number. And there was some good news in the report beyond the headline beats.

Most notably, paid clicks on Google properties rose a stunning 58% year-over-year. That continues the strength seen in Q1, when the figure rose 59%.

One of the long-term concerns for the advertising business is that, eventually, internet usage will move to apps and away from the browser and thus away from Google’s dominant search property. Obviously, that trend isn’t occurring at the moment.

On the other hand, margin pressure did continue. Traffic acquisition costs continue to rise faster than revenue. Alphabet’s adjusted operating margin dropped 2 points year-over-year, to 24%. Backing out losses in the “Other Bets” businesses (including autonomous driving subsidiary Waymo, Google Fiber, and other efforts), EBIT margins actually compressed 250 bps year-over-year.

For now, click growth is more than offsetting that pressure. And there’s no sign of that changing any time soon, at least based on first-half results. Still, with the Other Bets at most accounting for only a fraction of long-term value here, Alphabet remains reliant on the advertising business for 86% of its revenue – and pretty much all of its profit. The concern here remains that any changes in that business could trip up GOOGL stock.

Is Google Stock a Buy?

Admittedly, that seems like a flimsy concern coming out of Q2. It’s not as if Alphabet stock is all that expensive, even at the after-hours price. And the quarter was impressive, I’ll admit.

Still, though I’ve been consistently too skeptical, I don’t think earnings are quite as good as first impressions might suggest. Long-term concerns still remain.

And with the stock likely to close Tuesday up around 25% from early April lows, on the whole Alphabet earnings might not be impressive enough to catalyze another leg up for Google stock.

As of this writing, Vince Martin has no positions in any securities mentioned.