Alphabet Just Did Something It Hasn't Done in 7 Years. Is It Time to Invest? | The Motley Fool
Alphabet sits squarely in the fast-growing AI landscape, much like other tech giants navigating a mix of challenges and opportunities this year. The stock dipped in the spring as concerns about the impact of U.S. import tariffs on earnings lingered. Yet as President Trump engaged with other nations, those pressures eased.
The company also faced a U.S. antitrust lawsuit, but a September ruling removed the worst-case scenario and gave Alphabet a meaningful lift. Since then, the stock has risen by roughly 50%, and just recently Alphabet achieved a milestone it hadn’t reached in seven years. So, is it a good time to buy this leading tech name? Here’s a closer look.
Dominant market position
First, a quick refresher on Alphabet’s story. The company behind Google Search—arguably the most widely used search engine in the world—still commands about 90% of the search market. Advertising across Google’s platforms drives much of Alphabet’s revenue growth, but it isn’t the sole source of earnings.
Alphabet also owns Google Cloud, one of the globe’s major cloud providers, and that business is growing in double digits.
Today’s Movement
-2.42% | -7.75 | Price: 312.46
Beyond its core business, Alphabet’s heavy investment in artificial intelligence is tightening up its operations. It has developed its own large language model, Gemini, to serve internal needs and to offer AI capabilities to customers via Google Cloud. The cloud division also provides a broad suite of AI products and services—ranging from processing chips to a fully managed generative AI development platform—contributing to stronger performance in recent quarters.
In the most recent quarter, Alphabet noted that demand for AI infrastructure and generative AI powered a 34% uptick in cloud revenue.
A major risk removed
The looming cloud over Alphabet was the antitrust case in the U.S.—a risk that could have forced a breakup of revenue-driving Google. That threat diminished when a federal judge ruled that Alphabet could retain control of its Chrome browser, resulting in more lenient penalties.
Together with a still-reasonable valuation, these developments have helped lift Alphabet’s stock in recent months—and they paved the way for a milestone not seen in seven years: on November 21, Alphabet’s market value surpassed Microsoft’s for the first time since 2018. Back then, both giants traded around $800 billion; today Alphabet has eclipsed $3 trillion in market capitalization.
It’s worth noting that Alphabet has continued to build on this momentum, and its current market cap now sits around $3.8 trillion, placing it behind only Nvidia and Apple in size.
So, should you buy Alphabet now? It’s essential to remember that a towering market cap doesn’t automatically justify a buying decision. A company at that scale can become overvalued, face new headwinds, or simply be the wrong fit for a particular portfolio.
Why a large market cap can be favorable
Growing market cap can reflect strong investor confidence and sustained demand for a stock. Large caps can also offer resilience and liquidity that smaller names may lack. However, the most important considerations are the company’s earnings trajectory, financial health, and long-term prospects—along with a sensible valuation.
In Alphabet’s case, there are reasons for optimism: a track record of revenue and profit growth, a sizeable AI opportunity seen as still early in its lifecycle, and a relatively reasonable multiple. At roughly 30x forward earnings, Alphabet trades at a multiple that’s modest relative to many AI peers.
Taken together, these factors paint Alphabet as a compelling possibility for investors seeking exposure to AI-led growth, provided the stock remains a fit for your risk tolerance and portfolio goals.
Would you like this rewritten version tailored for a specific audience (e.g., casual investors, institutional readers) or adjusted to emphasize a particular investment angle (growth, value, or risk considerations)?
