Share prices can rise for a number of reasons, such as improvements in a company’s fundamentals, the narrative surrounding the stock, and, of course, an overall bull market that lifts all ships. In 2025, Alphabet (NASDAQ:GOOG) managed to check all three boxes.
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For starters, the company’s revenues and margins were golden. Revenues and margins moved decisively higher, with Alphabet delivering its first-ever $100 billion quarter in Q3 2025. Sales surged 15% in constant currency to $102.3 billion, while net income jumped 33% to $34.98 billion.
The company also enjoyed a groundswell of support thanks to the changing sentiment around the stock. Early fears that AI chatbots would eat into Google’s dominance have faded as Alphabet’s Gemini 3 LLM surged to the front of the pack. At the same time, Google Cloud’s $155 billion backlog at the end of Q3 underscored just how much runway the business still has ahead of it.
With fundamentals strengthening and sentiment swinging in Alphabet’s favor, the broader bull market provided the final tailwind.
However, as the company prepares to report its Q4 and full-year 2025 results on Wednesday, February 4, after the market closes, one long-time supporter is beginning to rethink his stance.
“Shares are not the value play they were a year ago,” explains 5-star investor Paul Franke. “Statistically speaking, investors buying [at] over $300 do not have the same backing from company operations, including returns/yields on capital invested. Plain and simple logic.”
Franke insists that he’s not down on the company but is instead deterred by the rapid rise of its share price. The investor notes that GOOG has pretty much doubled in value, while extensive capex has simultaneously pressured its free cash flow.
“In a sense, Alphabet has moved from a position of undervaluation to one of full valuation,” Franke adds.
The investor argues that history backs up this lukewarm approach. For instance, Franke cites the company’s EV to EBITDA and sales multiples, which he calculates are the highest since 2007 (just before the Great Recession).
And there’s another reason to be cautious, according to Franke: insiders are selling, including CEO Sundar Pichai.
Is Alphabet Stock Neutral or a Strong Buy?
“The prudent choice may be to wait for lower share pricing to appear in 2026 if you want to purchase GOOG,” concludes Franke, who is giving the stock a Hold (i.e., Neutral) rating. (To watch Franke’s track record, click here)
Most of Wall Street is marching to a very different beat. With 9 Buys and 1 Hold, GOOG cruises to a Strong Buy consensus rating. Its 12-month average price target of $380 points to an upside of ~12%. (See GOOG stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.