4 reasons to buy alphabet stock as there is no one tomorrow

On By Littum

Since the market just hit new high all-time and the average market assessment at the top end of the historic interval, some may think that there are no good deals left to buy.

But this is usually never true as there are always good deals that exist in some corner of the market.

And sometimes a good deal comes even in the form of a household name that stares you right in the face. Today, Alphabet (NASDAQ: GOOG) (Nasdaq: Googl) Looks like it good.

Despite a nice rally last year the alphabet remains the cheapest stock in Magnificent seven. Alphabet has a P/E ratio of 26.8, whereas no other Mag Seven stock has a valuation under 30 years. forward -looking P/E ratio is only 22.5.

GOOG PE RATTO CHART
Goog PE relationship Data of Ycharts

The forward -looking P/E relationship is even below it for S&P 500 Index, which is 24.3.

The low valuation comes despite several other elements that make the alphabet even cheaper than it looks. This includes $ 93 billion in cash on Alphabet’s balance, good for approx. 4% of its market cap. And Alphabet continues to lose money on his experimental “other efforts” segment. While we suppress today’s merit, as we will see, some of these projects probably have a significant positive value.

Part of the reason why Alphabet’s valuation is so low is that investors are concerned that the wealth of artificial intelligence starts like Openai, confusion and others will threaten the Google search industry.

However, Google search has huge distribution so much that the name Google is synonymous with search. And Alphabet’s AI derivatives Deepmind and Google Brain, gathered by Google in 2023, were the first to develop transformer technology, which is the breakthrough innovation that has activated chatgpt and other recent AI -Innovations.

The emergence of Chatgpt initially caught the alphabet away from the guard, but Google’s AI scientists appear to have gathered their action over the past year. In December, the alphabet released Gemini 2.0, its internal large language model, to rave reviews. And by putting AI-driven summaries at the top of appropriate searches, Google should be able to get rid of competitors and keep customers in the Google ecosystem when searching for information.

Last quarter, the Google search still managed to grow 12.2% despite its already massive size, which shows no bad effects from the new AI competition. And since the alphabet produces its own internal tensor treatment units and has optimized its own AI-Infrastructure, Google’s costs to produce AI are probably much lower than any startup, which is likely to run models on expensive Nvidia GPUs rented from the big clouds.