Is Alphabet Stock a Buy?

When it comes to leading Internet companies, there may not be any business that stands out the alphabet (NASDAQ: GOOGL ) (NASDAQ: GOOG). Silicon Valley’s success story has risen to become a thriving global enterprise, with a market cap measuring in the trillions of dollars.

this Technical stock In the past it has broken for partners. But is Alphabet a buy right now?

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By 2025, Alphabet is expected to grow 15% year-over-year to $403 billion. This is very impressive for such a large scale business.

But it’s also remarkable how widespread the gains have been. Google Search posted a top-line increase of 13%, while YouTube ad revenue was up 12%.

Google Cloud is the star of the show, registering a 48% sales gain in the fourth quarter (ending December 31, 2025). This segment is experiencing incredible demand from customers who want to work with the latest artificial intelligence (AI) tools.

“Approximately 75% of Google Cloud’s customers used our targeted AI vertical, from chips to models, to AI platforms and business AI agents,” CEO Sundar Pichai said in the Q4 2025 earnings call.

The company’s capital expenditures (capex) totaled $91 billion last year. This was significantly higher than the $53 billion in 2024.

Don’t skip the alphabet. It plans to have capex Between $175 billion and $180 billion This year the business wants to continue to build out the computing infrastructure necessary to meet Google Cloud AI-related demand, and build out AI capabilities for its widely adopted user-facing apps and advertising clients.

Investors are certainly concerned about all these costs, although Pichai and his leadership team believe capital spending is necessary to stay ahead of the curve. Return on investment is a big question mark. Time will tell if the big capex is a waste of money or a sound financial decision.

Investors should consider two key variables. The first part of the equation is the profit path. Alphabet’s earnings per share (EPS) is expected to grow at a compound annual rate of 12.7% between 2025 and 2028. I believe that there will be several years of double gains in the future.

Investors should also consider valuation. Right now, this stock is trading at a price-to-earnings (P/E) ratio of 28.5. Looking five years from now, it is not unreasonable to think that Alphabet’s shares could command a P/E multiple of 30, especially since it is one of the most dominant companies. Valuation tailwinds add an estimated 5% upside, perhaps higher if the market moves higher.

Taken together, the EPS growth potential and the starting P/E ratio make the perfect combination for this to be a winning investment.

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Neil Patel has no position in any of the mentioned stocks. The Motley Fool has and offers positions in alphabetical order. Motley Fool has a disclosure policy.

Is Alphabet Stock a Buy? Originally published by Motley Fool