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Alphabet (GOOGL), the parent company of Google, has seen its shares decline in 2025, with the stock down approximately 11.7% since the start of the year. This drop reflects concerns over increased competition in the artificial intelligence (AI) space, mounting legal and regulatory scrutiny, and broader economic uncertainties impacting advertising expenditures, a key revenue driver for the company.
Despite these headwinds, Alphabet’s business is showing solid resilience. The tech giant remains a dominant player in digital advertising, with its Search and YouTube platforms generating steady revenue. Its subscription services, hardware products, and rapidly growing Google Cloud division have also provided meaningful support to its overall performance. Importantly, Alphabet’s integration of AI into both its advertising and cloud businesses is beginning to pay off, helping the company remain competitive in an evolving tech landscape.
Further, from a valuation standpoint, Alphabet stock looks compelling. GOOGL stock is currently trading at levels significantly lower than those of other major tech giants, including Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN). Alphabet stock appears undervalued relative to its long-term earnings potential and dominant position in key digital markets. Let’s take a closer look.
Alphabet to Deliver Strong Growth
Alphabet is firing on all cylinders, with its diverse business segments continuing to deliver strong double-digit revenue growth. From Search and YouTube to subscription services and Google Cloud, the company’s core operations remain resilient and are thriving, led by the integration of AI across products and services.
AI is becoming a key growth engine for Alphabet, particularly in its Search business. The launch of AI Overviews has boosted user engagement and commercial queries. Now reaching more than 1.5 billion users monthly, AI Overviews has expanded its reach and the range of questions it can answer. Importantly, Google is maintaining stable monetization levels with this tool, providing a solid foundation for future innovation and revenue streams.
Another noteworthy advancement is Circle to Search, which is also benefiting from AI’s growing influence. The company has also introduced several new features that utilize large language models (LLMs) to enhance ad targeting and relevance, thereby improving the conversion rate.
YouTube is also demonstrating strong growth. Both advertising and subscription revenues are climbing, supported by increasing viewer engagement. Shorts, the company’s short-form video feature, saw engaged views rise over 20% in the first quarter. The monetization of Shorts is improving, particularly in the U.S., and subscription services such as YouTube Premium and Google One are expanding their subscriber bases, providing an added boost to top-line performance.
On the enterprise side, Google Cloud remains a significant growth catalyst. The Google Cloud Platform (GCP) continues to benefit from the widespread adoption of AI and cloud-based services, with momentum expected to persist.
Alphabet is also focused on operational efficiency, driving improvements in productivity, utilization, and cost control to support profit margins. With a well-diversified portfolio and AI as a transformative catalyst, Alphabet appears well-positioned to maintain its growth trajectory.
GOOGL Stock Is Undervalued
Alphabet stock appears to be undervalued, especially when considering the company’s strong financial performance, expanding use of AI across its products, and continued momentum in its core businesses. Looking ahead, these strengths are expected to support solid sales and double-digit earnings growth in 2025 and beyond. Yet, despite this promising outlook, GOOGL shares are trading at relatively modest valuation levels, with a forward price-earnings (P/E) ratio of 17.52x and a price-to-sales (P/S) ratio of 5.78x.
This makes Alphabet’s stock attractive compared to its peers. Tech giants like Microsoft, Apple, and Amazon are all trading at significantly higher forward P/E ratios—35.80x, 28.26x, and 34x, respectively. In addition, both Microsoft and Apple have higher P/S multiples than Alphabet.
Is GOOGL Stock a Buy?
While short-term risks persist, Alphabet’s combination of strong fundamentals, AI integration, and an attractive valuation makes it a compelling investment near the current levels.
Wall Street analysts are optimistic about GOOGL stock. Alphabet currently has a “Strong Buy” consensus rating with an average price target of $201.30. This implies potential upside of about 22% from current levels.
