Is Alphabet Stock Still a Bargain?
Key Points
Alphabet's stock has reached a premium valuation point.
Alphabet continues to post excellent results, proving it deserves that premium valuation.
- 10 stocks we like better than Alphabet ›
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stock has had a strong rally since April began. The stock has risen more than 33% since then, which may have investors wondering if Alphabet stock is still a bargain, as it was a few months ago.
Let's take a look at a few valuation measures and see if Alphabet is a buy right now or if investors should move their investment dollars elsewhere.
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Alphabet has gone from a laughingstock to a market leader
Alphabet wasn't the artificial intelligence (AI) leader it is today at this time last year. The market was concerned that AI was going to obliterate its Google Search business and that Alphabet's generative AI models (Gemini) couldn't stand up to the competition. That thesis has proven to be false so far. Google Search has transformed into an AI-first platform, with most searches now offering AI-powered summaries that enhance the overall product experience. Gemini has proven itself to be a leading AI model and can stand with some of the most prominent AI start-ups.
As a result, its valuation has increased thanks to improving confidence.
GOOG PE Ratio data by YCharts
Alphabet's price-to-earnings ratio has nearly doubled from its lows in April 2025, which may make investors concerned about its future. However, 30 times earnings has been the usual high-end range for best-in-class big tech stocks. For reference, Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) trade for 36 and 32 times earnings, respectively. So Alphabet may not be expensive, but it certainly isn't cheap.
However, earnings can be affected by many things, including investment gains, one-time tax effects, and depreciation after a major capital expenditure. All three of those apply to Alphabet, and it may be helpful to look at the business in terms of operational cash flow.
GOOG Price to CFO Per Share (TTM) data by YCharts
By this metric, Alphabet is the most expensive it has been in the past decade. Now, other companies trade in this same range, but they are expensively valued. So I think Alphabet is fully valued, which means that any future upside must come from business growth. Fortunately, Alphabet grew its revenue at an outstanding 22% pace this past quarter. That's much faster than the market's 10% average, which means Alphabet is still a solid stock to buy and hold on to -- it's just not as good a value as it once was.
Should you buy stock in Alphabet right now?
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Keithen Drury has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Apple. The Motley Fool has a disclosure policy.
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