Why Shares of Alphabet Stock Climbed 14% Last Month

Key Points

• Alphabet got a favorable antitrust ruling in September.

• The company's new image generator is leading to millions of app downloads.

• Alphabet stock is still not expensive at current prices.

• 10 stocks we like better than Alphabet ›

Shares of Alphabet (NASDAQ: GOOG) climbed 14% higher in September, according to data from S&P Global Market Intelligence. The parent company of Google, YouTube, and Google Cloud was helped by an antitrust ruling and new artificial intelligence (AI) services it launched last month. As one of the megacap technology stocks, Alphabet stock is up close to 50% in the last year and increasingly seen as a winner in the AI boom.

Here's why the stock climbed to new all-time highs yet again in September.

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New AI tools and an antitrust ruling

In early September, Alphabet received an update on its antitrust case with Google Search. A judge gave out remedies for the company after determining it was a monopoly in the search engine space. However, with the rise of new AI tools like ChatGPT, the judge's remedies were not harsh on Google, allowing it to keep its Google Chrome browser and Android operating system under the same corporate umbrella. Alphabet shares jumped on the news that its ecosystem of consumer internet services was not going to be broken up.

In other news, Alphabet released a new image generator called "Nano Banana" through its Gemini AI tool. The image creator has gone viral, sending the Gemini App to the top of the App Store rankings, surpassing ChatGPT in the process. This trend indicates that Alphabet is catching up to ChatGPT in customer usage, leading the way in consumer AI innovations.

App Store rankings will not directly impact Alphabet's revenue, but it should stem the tide of users adopting ChatGPT en masse compared to Alphabet products. In recent years, some investors have left Alphabet for dead because of fears over ChatGPT usage. Now, those fears may be proving to be overblown.

Image source: Getty Images.

Is Alphabet stock a buy?

Alphabet stock had a lot of risks eliminated last month, both from antitrust court cases and its competition in AI. Now, the stock is closing in on a market cap of around $3 trillion.

Despite its soaring stock price, Alphabet does not look overly expensive right now. Its price-to-earnings ratio (P/E) sits at 26, which is lower than most of the AI technology players, even though Alphabet has all the tools and assets to dominate the AI race. It has the best data (Google Search, YouTube, Gmail) to train on and top-of-the-line infrastructure through its Google Cloud division.

The stock may be soaring to all-time highs, but don't think you've missed the boat in owning shares of Alphabet. Buy this stock and hold on for the long haul.

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Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.