Alphabet's stock price reached new highs in 2025, rising 78% over the previous six months. Despite this surge, the stock remains at a reasonable valuation, with a forward price-to-earnings multiple of 29.
The company has invested billions in AI chips and data centers, strengthening its competitive position. Google Cloud revenue increased 34% year over year in the third quarter, driven by demand for AI-optimized compute performance.
AI search features have also boosted user engagement in Google Search, which saw advertising revenue grow 14% year over year last quarter. While advertising dependency poses risks during recessions, Alphabet is diversifying revenue through subscriptions, cloud services, and its Waymo self-driving car business.
Wall Street analysts expect earnings per share to grow at a 15% annualized rate over the next several years. However, The Motley Fool Stock Advisor recently identified 10 stocks it considers better buys than Alphabet, citing potential for monster returns.
The advisor highlighted past successes like Netflix and Nvidia, which generated significant gains after being recommended. Stock Advisor's total average return is 955%, outperforming the S&P 500's 196%.