Alphabet Inc. has evolved from its beginnings as a search engine into a dominant force in AI, particularly with tools like Gemini and its extensive suite of products. Even after its meteoric rise, its valuation still appears attractive compared to competitors, leading many to consider investing now. However, some top investment analysts recommend looking elsewhere for stocks, potentially complicating investment decisions.
In the fast-paced world of tech stocks, Alphabet Inc. (NASDAQ: GOOG, GOOGL) remains a standout in the realm of artificial intelligence. Starting its remarkable journey with the launch of its revolutionary search engine back in the late ’90s, Alphabet has been reshaping how we search and interact online. During my college years studying information science, Google’s approach to search was nothing short of a revelation, moving far beyond predecessors like Lycos and Alta Vista, who required meticulous search strings. With Google, it felt as if the search engine somehow read our minds, consistently delivering results that hit the spot.
Fast forward 25 years, and Google hasn’t lost its touch. It consistently improved its search engine while surrounding itself with a suite of AI tools—think Google Translate or Maps—that seemingly put artificial intelligence in everyone’s hands. Long before it was branded as Alphabet, Google was already quite accomplished in the field of AI, trivializing it for the average user. Who would’ve imagined that just a few months after OpenAI launched ChatGPT, Alphabet would also roll out its large language model (LLM)? The excitement is palpable about what innovations might still lurk behind their research doors.
When it comes to online search and advertising, Alphabet’s Google service is still king, thanks to its robust commitment to AI. The Gemini LLM gives ChatGPT a run for its money and is already being utilized in popular tools like Gmail and Google Docs. Not to forget, an AI mode was introduced to Google Search in March 2025, while the Gemini system marches forward with ambition. Alphabet’s commitment to AI isn’t just a talking point; it’s the muscle that keeps its brand at the forefront of technology and user engagement.
Investors who got in on the action back when Google went public in August 2004 can pat themselves on the back, as a mere $1,000 investment would have swelled to over $63,700 by May 2025. Isn’t that wild? Even now, post the AI boom following ChatGPT, Alphabet’s stocks appear fairly valued. Notably, when compared with competitors like Microsoft and Nvidia, Alphabet’s numbers look much more appealing in valuation ratios. Here’s a snapshot:
| AI Stock | Market Capitalization | Price to Earnings (P/E) | Price to Sales (P/S) | Price to Free Cash Flow (P/FCF) |
|————-|———————–|————————-|———————–|———————————–|
| Alphabet | $1.95 trillion | 17.8 | 5.4 | 26.0 |
| Microsoft | $3.33 trillion | 34.6 | 12.3 | 48.0 |
| Nvidia | $3.19 trillion | 44.4 | 24.4 | 52.4 |
With Alphabet’s stock still appearing financially sound—even doubling would keep it within a reasonable range compared to its competitors—there’s certainly a case to be made for investment. I personally own Alphabet stock over its Redmond counterpart.
However, before pulling the trigger on a $1,000 investment now, potential buyers should consider that the Motley Fool’s Stock Advisor team has identified the top 10 stocks for investors, and Alphabet isn’t among them. Historical performance suggests that such picks could lead to significant future gains—like $1,000 invested in Netflix back in December 2004 morphing into a staggering $613,951 today!
But let’s not forget, with a total average return of 948% from Stock Advisor compared to 170% for the S&P 500, it’s hard to ignore their recommendations as a valuable resource. So, check out their latest list if you’re looking to boost your portfolio.
Before we wrap this up, it’s important to note the ties here; Suzanne Frey of Alphabet is on the board of The Motley Fool, and Anders Bylund holds positions in both Alphabet and Nvidia. The Motley Fool also has shares in Alphabet, Microsoft, and Nvidia, adhering to a disclosure policy that advises transparency in dealings.
Alphabet stands tall as a key player in the AI sector, showcasing consistent growth and innovation over the past two and a half decades. Investing in Alphabet stocks seems quite appealing given their fair valuations compared to industry peers like Microsoft and Nvidia. However, potential investors should do their homework, since trusted advisor services like Stock Advisor exclude Alphabet from their current top stock picks. It’s a mixed bag, leaving investors to weigh their options carefully.
Original Source: www.nasdaq.com
