Investment advisor Ross Gerber said Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) is undervalued compared to other tech giants, as Google ramps up multi-billion-dollar AI and cloud investments to compete with companies like Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN).
Ross Gerber Calls Google ‘Inexpensive' Compared To AI Peers
On Monday, Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, highlighted Alphabet's strong position in AI and technology while arguing its stock remains attractively priced.
"YouTube, Waymo and Gemini. Along with the search cash cow. A bit of quantum and all the recent knowledge of the internet. Google seems very inexpensive relative to AI mega cap peers," Gerber wrote on X, formerly Twitter.
Alphabet currently holds a $2.58 trillion market cap, making it the world's fourth most valuable company, behind Nvidia Corporation (NASDAQ:NVDA), Microsoft and Apple Inc. (NASDAQ:AAPL).
Google Ramps Up AI And Cloud Spending
Alphabet has unveiled ambitious plans to strengthen its AI and cloud infrastructure. Last month, the company announced a $9 billion investment in Virginia to build and expand data centers across Chesterfield, Loudoun and Prince William counties.
Separately, in July, Google committed $25 billion to data center and AI infrastructure across the PJM Interconnection grid, reinforcing its position in the AI arms race.
The company also closed a $2.4 billion deal to license technology from AI startup Windsurf, hiring its CEO and key engineers as part of its aggressive talent acquisition strategy.
Strategic Deals With Meta And Oracle
Earlier, it was also reported that Meta struck a six-year, $10 billion deal to run its Llama AI models and generative AI tools on Google Cloud.
Oracle Corp (NYSE:ORCL) also announced a collaboration to integrate Google's Gemini AI models into its Oracle Cloud Infrastructure.
These partnerships strengthen Google Cloud's position as it seeks to gain ground on Amazon Web Services and Microsoft Azure.
In the second quarter, Alphabet reported $96.43 billion in revenue, beating expectations, with Google Cloud revenue up 31% year over year to $13.62 billion.
Alphabet's Competitive Edge
Google's forward P/E ratios of 22.12 (GOOGL) and 22.17 (GOOG) are relatively low compared to its major tech peers, suggesting potential undervaluation given its growth in AI and cloud. In contrast, Tesla Inc.'s (NASDAQ:TSLA) forward P/E of 178.57 reflects extremely high growth expectations priced into the stock.
| Company | Ticker | Forward P/E (Current) |
|---|---|---|
| GOOGL | 22.12 | |
| GOOG | 22.17 | |
| Meta Platforms | META | 27.93 |
| Amazon | AMZN | 34.60 |
| Apple | AAPL | 29.15 |
| Nvidia | NVDA | 39.06 |
| Microsoft | MSFT | 32.79 |
| Tesla | TSLA | 178.57 |
Alphabet has a consensus price target of $211.03, based on ratings from 34 analysts. The three latest analyst ratings came from Needham, Loop Capital and Wells Fargo, setting an average price target of $199, implying a potential downside of approximately 6.46%.
Price Action: Alphabet's Class A shares are up 12.4% year to date, while Class C shares have gained 12.01%, according to Benzinga Pro.
During the same period, Meta has risen 23.27%, Nvidia is up 25.88%, Microsoft has gained 21.05%, Amazon has increased 3.99%, while Apple and Tesla have declined by 4.80% and 11.97%, respectively.
According to Benzinga’s Edge Stock Rankings, GOOGL continues to show a solid upward trajectory over short, medium and long-term timeframes. More performance details are available here.
Photo Courtesy: Shutterstock/JHVEPhoto
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
