Why Alphabet (GOOG) Is the Smartest Buy in Tech Stocks Right Now

Alphabet (Google’s parent company) is currently the most affordable stock among the “Magnificent Seven” tech giants. Despite fears about AI competition, Alphabet continues to deliver strong financial results, making it an attractive option for investors.

Why Alphabet Is a Bargain

• Alphabet’s price-to-earnings (P/E) ratio is 18.9, much lower than peers like Meta (26.7) and Microsoft (36), even though its revenue is growing just as fast or faster.
• Last quarter, Alphabet’s revenue grew 14% year-over-year to $90.2 billion. Over the past five years, revenue has more than doubled to $360 billion annually.
• Alphabet’s income streams are diverse: Google Search, YouTube ads and subscriptions, and Google Cloud each generate about $10 billion in quarterly revenue, all growing at double-digit rates. This diversification helps protect Alphabet’s financial momentum.

Google Cloud: The New Profit Engine

• Google Cloud’s revenue jumped 28% year-over-year, driven by demand from AI startups. It’s approaching $50 billion in annual recurring revenue.
• After years of losses, Google Cloud now has an 18% profit margin, earning $2.2 billion in operating income last quarter. If annual revenue reaches $100 billion with a 25% margin, that would mean $25 billion in yearly profit from this division alone.
• Google Cloud’s rising profits are becoming a major part of Alphabet’s overall earnings, positioning the company for continued growth as AI infrastructure demand rises.

Strong Shareholder Returns

• Alphabet has started paying a dividend (0.5% yield) and continues aggressive share buybacks, while also investing heavily in AI and cloud infrastructure.
• The management team has a strong record of balancing growth investments with rewarding shareholders, a rare combination among tech giants.
• Bottom Line

Alphabet combines fast growth, strong profits, and shareholder-friendly policies—all at the lowest valuation among the Magnificent Seven. For investors seeking value in big tech, Alphabet stands out as the top choice.

The information provided in this content is for informational and educational purposes only and should not be construed as financial, investment, or trading advice. The author may hold positions in some of the securities or assets discussed. Past performance is not indicative of future results.