Alphabet today
As of 01/03/2025 17:45 Eastern
- 52 week range
- $130.66
▼
$201.42
- Dividend yield
- 0.42%
- P/E ratio
- 25.44
- Target price
- $206.44
It may seem strange to think about how to find value among seven stocks worth more than $1 trillion. But it’s worth discussing in the case of Alphabet. NASDAQ: GOOGLE. Google’s parent company has the lowest forward valuation multiple among the Magnificent Seven stocks. With a forward P/E of 22x for the S&P 500, it is also the only Magnificent Seven stock trading below or equal to the broader market valuation.
This may seem a little out of place given that the firm has just announced a breakthrough in quantum computing. However, there are certainly concerns surrounding this company that are putting pressure on the stock. I’ll break down and analyze Alphabet’s key business segments and give my opinion on these tech stocks.
Google Search: Still King of Internet Search, Despite Chatbot Concerns
Alphabet’s biggest source of revenue is Google search. Companies pay Google to place ads in search results and are charged when users click on their ads. Google search accounted for about 55% of total revenue last quarter. This concentration of revenue is one of the factors influencing Google. As more people discover the often superior search capabilities of chatbots like ChatGPT, analysts fear a loss of traffic to Google search.
So far, this has not led to a decline in Google search revenue. In each of the last five quarters, they grew by more than 10% year over year. However, ChatGPT appears to be gaining market share as a mainstream search engine. A good sign is that market share losses were less severe in shopping and travel. These types of searches generate a lot of advertising sales.
Google is struggling with the rise of chatbots. The company will reportedly introduce “AI Mode” to Google Search. It aims to retain the familiar nature of Google search by combining it with the Gen-AI capabilities of its Gemini model. Google has billions of daily users, many times more than ChatGPT’s 300 million weekly users. As Google adds new AI features, I believe it will be able to maintain its huge share of the search market. Users are very familiar with its product. Also, ChatGPT isn’t that new at this point; he is just over two years old. The fact that Google search revenue remains strong is a good sign for the future.
The potential antitrust breakup of Google Search is another concern; however, the company will fight this tooth and nail. He will likely appeal any decisions that contradict him, postponing the real consequences for several years.
Alphabet’s other businesses are strong, and Waymo and Quantum have long-term growth potential
In addition to search, Alphabet has several other important revenue-generating businesses. This includes YouTube advertising revenue, third-party ad sales, subscriptions, platforms, device revenue, and Google Cloud revenue. Each of these four segments accounted for between 8% and 13% of total revenue last quarter. Almost all of them showed strong growth last quarter. Third-party advertising business has been steadily declining; however, it is the smallest of these segments.
The shift away from traditional television is a secular trend that is a strong tailwind for YouTube ad revenue. In addition, Google Cloud’s business is experiencing accelerating growth. Overall, the vast majority of Alphabet’s business remains strong. The company’s Other Bets segment holds exciting long-term potential, although it doesn’t help generate much revenue at the moment.
Alphabet stock forecast for today
$206.44
Growth potential 7.64%Moderate purchase
Based on ratings from 43 analysts
| High forecast | $232.00 |
|---|---|
| Average forecast | $206.44 |
| Low forecast | $165.00 |
Alphabet stock forecast details
Two large projects that fall into this segment are Waymo and Google Quantum AI. The company is establishing itself as a leader in two potentially huge future technologies: autonomous driving and quantum computing. Waymo was the first company to implement fully autonomous driving on public roads in 2017. It is now a leader in the robotaxi service industry. Experts predict that the overall ridesharing market will nearly quadruple by 2032.
Google’s recent introduction of its Willow quantum chip was a breakthrough. This caused a huge increase in the prices of other quant stocks. This is a much longer-term bet that won’t bear fruit in terms of revenue for at least a few years. However, it could be a huge development if quantum computers are eventually able to surpass supercomputers in commercially relevant applications.
Alphabet Could Be One of the 7 Best Stocks to Own
Overall, Alphabet’s business remains strong, and signs point to its ability to maintain much of its dominance. The company’s long-term bets in potentially world-changing areas add growth potential that investors shouldn’t ignore. Its valuation relative to other Magnificent Seven stocks could make it one of the best long-term stocks in the group.
Before you consider Alphabet, you should hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and Alphabet wasn’t on the list.
While Alphabet is currently being rated a Moderate Buy by analysts, the top-rated analysts rate these five stocks as Strong Buys.
View five stocks here
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