Why Alphabet (GOOGL) is a High-Value AI Stock to Buy Now

In the rapidly evolving landscape of artificial intelligence (AI), Alphabet Inc. (GOOGL) stands out as a compelling investment opportunity, driven by strategic momentum, favorable regulatory outcomes, and undervaluation relative to its growth potential. Recent developments underscore the company’s ability to navigate legal challenges while accelerating its AI-driven transformation, making it a high-conviction buy for investors seeking exposure to the next frontier of technology.

Strategic Momentum: AI as the Core Growth Engine

Alphabet’s AI strategy is no longer a speculative bet but a proven driver of revenue and innovation. In Q2 2025, the company reported $96.4 billion in revenue, a 14% year-over-year increase, with Google Cloud emerging as its fastest-growing segment, surging 32% to $13.6 billion in revenue [3]. This growth is fueled by demand for AI infrastructure and generative AI solutions, as enterprises increasingly rely on Google’s cloud to power machine learning workloads.

The company’s AI roadmap is equally ambitious. Investments in custom AI chips, such as the Tensor Processing Units (TPUs), and the development of advanced models like Gemini, position Alphabet to dominate the AI infrastructure market [4]. Meanwhile, consumer-facing innovations like AI Overviews and AI Mode in search are enhancing user engagement and driving more complex interactions, creating a flywheel effect for data generation and monetization [3]. CEO Sundar Pichai has emphasized that AI is “transformative” for Alphabet’s long-term growth, a sentiment echoed by analysts who highlight the company’s ability to integrate AI across its ecosystem [3].

Favorable Antitrust Rulings: Avoiding a Breakup, Preserving Synergy

A landmark antitrust ruling in September 2025 removed a major overhang for Alphabet. While a U.S. federal judge ruled that Google maintained an illegal monopoly in online search, the decision spared the company from being forced to sell off Chrome or Android—two of its most critical assets [2]. Instead, the court mandated that Google share its search data with qualified competitors and restrict payments to secure default search placements, but not eliminate them entirely [2].

This outcome was a net positive for Alphabet. Shares surged over 7% in the aftermath, reflecting investor relief that the company avoided a forced breakup [1]. The ruling also acknowledged the dynamic role of AI in reshaping the tech landscape, with Judge Amit P. Mehta noting that overly rigid remedies could stifle innovation [5]. While Alphabet plans to appeal the data-sharing requirement, the decision preserves its ability to leverage synergies across its platforms, a key advantage in scaling AI-driven services.

Undervaluation in a High-Growth Sector

Despite its dominance in AI and cloud computing, Alphabet remains attractively valued. Its forward price-to-earnings (P/E) ratio stands at approximately 21, significantly lower than peers like Microsoft (32) and Apple (28) [5]. This discount reflects market skepticism about Alphabet’s ability to monetize AI, but the company’s financials tell a different story.

Alphabet’s price-to-earnings-to-growth (PEG) ratio is estimated at 1.36 for Q3 2025, indicating that investors are paying a moderate premium for its earnings growth relative to industry benchmarks [5]. More compellingly, its forward P/E/G ratio is 0.8, a metric that adjusts for growth and suggests undervaluation [4]. For context, stocks with PEG ratios below 1 are typically considered undervalued, making Alphabet an appealing prospect in a sector where high multiples are the norm.

Conclusion: A Buy for the Long-Term

Alphabet’s combination of strategic AI momentum, favorable regulatory outcomes, and undervaluation creates a rare alignment of catalysts for long-term investors. The company’s ability to innovate across both consumer and enterprise AI, coupled with its preserved platform synergies, positions it to capitalize on the multi-trillion-dollar AI opportunity. While short-term legal appeals and competitive pressures exist, the fundamentals remain robust. For investors seeking exposure to AI’s next phase, Alphabet offers a compelling, underappreciated opportunity.

Source:
[1] Google keeps Chrome and Apple deal but must share data in big antitrust ruling [https://www.reuters.com/sustainability/boards-policy-regulation/google-keeps-chrome-apple-deal-must-share-data-big-antitrust-ruling-2025-09-02/]
[2] Google Must Share Search Data With Rivals, Judge Rules [https://www.nytimes.com/2025/09/02/technology/google-search-antitrust-decision.html]
[3] Alphabet Announces Second Quarter 2025 Results [https://www.sec.gov/Archives/edgar/data/1652044/000165204425000056/googexhibit991q22025.htm]
[4] Alphabet’s AI Push Is Accelerating -- Is the Stock a Buy Now? [https://www.fool.com/investing/2025/07/28/alphabets-ai-push-is-accelerating-is-the-stock-a-b/]
[5] Zacks Research Has Bullish Outlook for Alphabet Q3 ... [https://www.marketbeat.com/instant-alerts/research-analysts-set-expectations-for-alphabet-q3-earnings-2025-08-14/]