Is Alphabet Stock a Buy Now?

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) investors have had a difficult year so far, as shares of the technology giant have lost 15% of their value as of this writing, driven by the broader weakness in technology stocks on account of tariff-fueled economic uncertainties, but the company's latest results suggest that its fortunes may turn around.

Shares of the technology giant popped after the release of its first-quarter 2025 results on April 24. Alphabet's top line exceeded expectations, while its earnings crushed Wall Street's estimate by a big margin. The company is benefiting from the growing deployment of AI-focused tools in its various offerings, which is why it saw robust growth in its advertising and cloud businesses.

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Should investors start buying Alphabet stock following its results in anticipation of more upside? Let's find out.

Alphabet's AI tools should translate into solid long-term growth

Alphabet's revenue increased 14% year over year last quarter to $90.2 billion in constant-currency terms. Meanwhile, the company's earnings jumped 49% from the year-ago period to $2.81 per share. Alphabet CEO Sundar Pichai pointed out that AI is enabling "significant growth opportunities" for the company.

The tech giant is offering powerful graphics processing units (GPUs) from Nvidia, along with its custom artificial intelligence (AI) processors to customers for AI model training and inference. As a result, Alphabet customers can build and deploy applications or integrate generative AI solutions into their businesses through its Google Cloud platform without the need to invest in expensive hardware.

The company also offers a development platform with which its customers can build AI agents and deploy them in more than 100 enterprise applications. This should turn out to be another long-term tailwind for Alphabet, since the agentic AI market is expected to clock annual growth of 44% through the next decade.

The rapid adoption of the above-mentioned AI-focused tools explains why Google Cloud revenue increased an impressive 28% year over year to $12.3 billion. That was much higher than the company's overall revenue growth, and the quarterly revenue run rate of the cloud business indicates that this segment could hit $50 billion in revenue this year.

What's more, the Google Cloud business is growing at a faster pace than the overall cloud market. Market research firm Canalys expects global cloud market revenue to jump 19% in 2025, and Alphabet's Q1 cloud revenue growth suggests that it is gaining ground in this space. Given that the adoption of cloud-based AI services is projected to grow at an annual rate of 32% through 2029, it won't be surprising to see Alphabet's cloud revenue increasing at solid rates in the long run.

Coming to the company's search and advertising business, users are rapidly adopting the AI Overviews on Google Search. That's not surprising, as this feature gives users a summary of the query or the topic they are looking for, along with relevant links. Alphabet points out that this feature is now being used by more than 1.5 billion users each month.

Meanwhile, another AI-powered search tool known as Circle to Search, which is now available across more than 250 million devices, saw a 40% spike in usage last quarter.

All this should allow Google to maintain its dominance in the search engine market as users increase the adoption of its AI search tools. That, in turn, should ideally help Google attract more advertisers.

The valuation makes this stock a no-brainer buy right now

Analysts have raised their earnings growth expectations for Alphabet following its latest report. This is evident from the chart.

Data by YCharts.

What's worth noting is that analysts now expect slightly better earnings performance from the company over the next couple of years as well. However, don't be surprised to see Alphabet do better than that, as the growing adoption of its AI tools could encourage advertisers and users to spend more on its offerings.

That's why investors should consider buying Alphabet right away, as it is trading at just 18 times earnings, a nice discount to the tech-laden Nasdaq-100 index's price-to-earnings ratio of 28. Alphabet's potential to deliver stronger earnings growth could eventually lead the market to reward it with a premium valuation, and that could send this tech stock higher in the future.

Should you invest $1,000 in Alphabet right now?

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.