Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Understanding the Value of Alphabet Inc. ($GOOGL) Stock
Hey there, savvy investors! If you’re on the hunt for a tech stock that’s got the perfect mix of stability, growth, and a sprinkle of undervaluation, Alphabet Inc. ($GOOGL)—you know, the folks behind Google—might just be calling your name. As of April 29, 2025, with the stock trading at $165, there’s a lot to unpack about why Alphabet could be a gem in your portfolio. Let’s break it down with some hard-hitting data, a peek into its future, and a few things to watch out for. Buckle up—this is going to be an exciting ride!
Alphabet by the Numbers: A Financial Powerhouse
Alphabet isn’t just the king of search; it’s a financial juggernaut. Here’s a snapshot of its latest performance:
- Revenue: A whopping $328 billion over the trailing twelve months (ttm), up 15% year-over-year. That’s the kind of growth that makes investors sit up and take notice.
- Earnings Per Share (EPS): $8.05 ttm, reflecting a net income of $91 billion. This translates to a forward P/E ratio of 19.5—pretty reasonable for a tech titan.
- Free Cash Flow: $60.8 billion ttm, giving Alphabet the firepower to innovate, return capital to shareholders, and weather any storm.
But here’s the kicker: using the Benjamin Graham intrinsic value formula (a favorite of value investors), I calculated Alphabet’s intrinsic value at $192.60—about 14% above its current price of $165. Some modern discounted cash flow (DCF) models even peg it as high as $230, suggesting a potential 28% upside. Undervalued? Quite possibly. Let’s explore why.
Why Alphabet Is a Tech Titan You Can’t Ignore
- The Search Empire That Keeps on Giving
Google owns ~90% of the global search market. That’s not just dominance—it’s a moat. Advertisers flock to Google because, well, where else are they going to go? This translates to a steady $307 billion in ad revenue (ttm), and with YouTube’s growth in the streaming space, that number isn’t slowing down anytime soon. - Google Cloud: The Next Big Thing
While search is the cash cow, Google Cloud is the growth engine. Analysts on X are buzzing about its potential, projecting a $120 billion run rate in five years. Even better? Cloud turned profitable in 2024, and its margins are climbing. If Alphabet can keep this momentum, it’s not just a search company—it’s a cloud powerhouse. - AI Innovation That’s Turning Heads
Alphabet isn’t sitting still in the AI race. From the Gemini models to AI-powered ad tools, the company is doubling down on generative AI. Imagine smarter search results, hyper-targeted ads, and maybe even a few surprises in the works. This isn’t just about keeping up with OpenAI—it’s about setting the pace. - Shareholder Love: Dividends and Buybacks
Alphabet started paying a dividend in 2024 ($0.20/quarter, ~0.5% yield at $165) and has been aggressively buying back shares, reducing its share count by ~5% over the past five years. That’s a company that knows how to reward its investors while boosting EPS.
But Wait—There Are Risks to Watch
No stock is perfect, and Alphabet has its share of challenges. Here’s what could keep you up at night:
- Regulatory Storm Clouds
The U.S. Department of Justice isn’t playing nice. A 2024 ruling labeled Google a monopolist, and ongoing antitrust lawsuits could lead to fines or forced changes to its business model. The EU’s Digital Markets Act is another headache, potentially impacting ad revenue. Regulatory risks are real, and they’re not going away anytime soon. - AI Spending: A Double-Edged Sword
Alphabet is pouring billions into AI—think $75 billion in annual capex, according to some X posts. While this could cement its leadership, it’s also squeezing margins in the short term. If competitors like OpenAI or Microsoft gain ground, those investments might not pay off as hoped. - Ad Market Slowdown
Alphabet’s ad revenue is tied to the global economy. If a recession hits, ad spending could take a nosedive. With digital ad growth maturing, Alphabet needs its other bets (like cloud) to pick up the slack.
What’s the Verdict? Should You Buy $GOOGL?
At $165, Alphabet looks like a solid buy for growth-oriented investors. Analysts agree, with a consensus price target of $208.48 (a 26% upside), and DCF models suggest it could climb even higher. The company’s dominance in search, explosive growth in cloud, and AI innovation make it a tech stock with serious staying power. Plus, that 14–28% undervaluation is hard to ignore.
But if you’re a strict value investor following Benjamin Graham’s playbook, you might want to wait for a dip—say, down to $129.04 (the buy price with a 33% margin of safety). And don’t forget those regulatory and AI risks—they could throw a wrench in Alphabet’s plans if things go south.
Final Thoughts: A Stock for the Long Haul
Alphabet isn’t just a tech stock; it’s a bet on the future of digital everything—search, cloud, AI, and beyond. If you believe in the power of innovation and can stomach some regulatory turbulence, $GOOGL could be a cornerstone of your portfolio in 2025 and beyond. So, what do you think—ready to hit that buy button, or are you waiting for a better entry point? Let’s chat in the comments—I’d love to hear your take!
Disclaimer: This blog is for informational purposes only and not financial advice. Always consult a financial advisor before investing. Stock prices and market conditions can change rapidly.
Note: Its not a financial advice, just for learning purposes
Check out this stock market course below if you want to master the market!
Want to learn a buy low sell high swing trading strategy? check the link below
Want to learn the crypto? check out the guide below
Want 7 of the best stock market books, change your life now master the market with the link below!
