Alphabet (NASDAQ:GOOGL) has ridden its groundbreaking search algorithms to become one of the biggest companies around. However, the advent of AI has sparked some concern that alternative search options, such as large language models like ChatGPT, could steal some of the company’s thunder.
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This is one reason why GOOGL’s share price has not exactly been setting the world on fire of this year (down ~4% year-to-date) – though it has been starting to pick up steam over the past 3 months (up ~16%).
GOOGL bulls can point to plenty of reasons for optimism, including growing revenues ($90.2 billion for Q1 2025 – an increase of 12% year-over-year) and strengthening operating income ($30.6 billion for Q1 2025 – an increase of 20%).
In addition, it is not like the Alphabet is standing pat when it comes to AI. The company will be spending some $75 billion in capex, much of it related to developing AI solutions. Alphabet has already incorporated AI features into its searches, providing another antidote for those worried about its place in the Internet ecosystem.
Citing this and Alphabet’s “rockstar financial performance,” one investor known as RI Research believes it is time to go all-in on GOOGL.
“AI leadership, new product launches, and positive Q2 earnings momentum support continued double-digit growth and strong bullish sentiment,” explains the investor.
RI Research believes that Alphabet is well-positioned to be one of the leaders in the global AI transformation. It is this focus on AI – along with “a massive $95 billion cash pile” – that provides further encouragement for RI Research.
“The company is heavily focused on building an extensive AI infrastructure, and given Google’s rockstar balance sheet, it is well-prepared to become the world’s leading AI infrastructure owner,” adds RI Research.
Moreover, despite the recent gains over the past few months, RI Research points out that GOOGL is a bargain compared to its prominent tech counterparts. Indeed, its Forward Price-to-Earnings ration is below 20 – “way lower than Magnificent 7 peers.”
For RI Research, the verdict on Alphabet before its Q2 earnings expected later this month is therefore crystal clear.
“There are numerous bullish catalysts in motion, together with compelling valuation, that reinforce a Strong Buy rating reiteration,” concludes the investor. (To watch RI Research’s track record, click here)
That is certainly the view on Wall Street as well. With 28 Buys and 9 Holds, GOOGL enjoys a Strong Buy consensus rating. Its 12-month average price target of $202.24 has an upside in the low single digits. (See GOOGL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.