Google parent Alphabet can still prosper as advertising takes a less prominent role.
Amid doubts among some investors, The Trade Desk sells at a considerable discount.
After years of struggle, Roku might be ready for a long-awaited breakout.
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It may surprise investors that Google parent company Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) has become a "bargain." Nonetheless, its P/E ratio of 22 not only makes it the "Magnificent Seven" stock with the lowest valuation, but it could also indicate that the pessimism surrounding the stock is overdone.
Digital advertising made up 74% of the company's revenue in the first half of 2025. Unfortunately, the rise of generative AI has challenged that dominance. For the first time in years, Google Search's market share has fallen below 90%, according to StatCounter, and with artificial intelligence (AI)-driven searches directing users to websites less often, that revenue source is in question.
However, Alphabet has long prepared for the day when ad revenue becomes less critical. To that end, it has acquired numerous businesses. One of them, Google Cloud, now constitutes 14% of the company's revenue.
Additionally, Waymo could become a significant revenue source once autonomous driving becomes more prevalent, and other businesses could contribute further to the top line over time.
Furthermore, Alphabet claims $95 billion in liquidity, and with the company generating $67 billion in free cash flow over the trailing 12 months, it is in a strong position to fund its competitive efforts. That positioning, along with the aforementioned P/E ratio, likely makes Alphabet an excellent buy for value investors.
When one considers the dramatic sell-offs after two of the company's last three earnings reports, recommending The Trade Desk (NASDAQ: TTD) may seem to make little sense on the surface.
Indeed, the revenue miss in the earnings report for the fourth quarter of 2024 prompted investors to question what was a lofty valuation. Also, the challenges with "walled gardens," closed ecosystems such as Alphabet's Google or Meta Platforms, also alarmed investors in its earnings report for the second quarter of 2025.
Nonetheless, The Trade Desk offers a critical tool to help advertisers and ad agencies place ads on platforms most likely to drive the highest returns. As it transitions customers from Solimar to the AI-driven Kokai platform, those benefits are likely to improve.
Moreover, unlike the "walled gardens," The Trade Desk is not an advertiser and holds no bias toward one platform, making it a more suitable choice for many of its clients. Furthermore, amid the downturn, its forward P/E ratio of 31 is far below the 53 average since the beginning of 2023, indicating investors may want to consider adding shares while the stock is on sale.
Admittedly, investing in Roku (NASDAQ: ROKU) has demanded a high level of patience, and indeed, many investors are likely frustrated with the fact that the stock remains more than 80% below its July 2021 high.
However, that discount is arguably a buying opportunity rather than a reason to avoid the stock. It remains the No. 1 TV OS platform in the U.S., Canada, and Mexico, and has continued its expansion in Latin America and Europe to expand its global footprint. Also, streaming hours rose 17% over the last year, indicating consumers continue to make greater use of the platform.
Additionally, many analysts have long been critical of its ongoing losses, so it came as a pleasant surprise when it earned almost $11 million in Q2. Indeed, investors should note that it still posted an operating loss, with its profits due to unrealized gains from the change in fair value of strategic investments. Still, that result indicates that Roku is on track to meet its goal to turn operationally profitable by next year.
Also, even though that profit is not sufficient to give it a trailing P/E ratio, a price-to-sales (P/S) ratio of just above 3 affirms how inexpensive the stock has become. As it cements its leadership in streaming and turns operationally profitable, the improvements should take Roku stock much higher over time.
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Will Healy has positions in Roku and The Trade Desk. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Roku, and The Trade Desk. The Motley Fool has a disclosure policy.