The Nasdaq Just Hit Correction Territory: This Magnificent Stock Is a Bargain Buy

Core Viewpoint - The Nasdaq Composite has entered correction territory, dropping over 13% from its record high on December 16, indicating a natural part of the stock market cycle that presents potential investment opportunities, particularly in companies like Alphabet [1][2][3]. Company Performance - Alphabet's stock is down 12% year to date and nearly 20% from its 12-month high, with only Tesla and Nvidia performing worse among the "Magnificent Seven" stocks [4]. - Despite the stock price drop, Alphabet's financial performance remains strong, with over $350 billion in revenue for 2024, a 14% year-over-year increase, and a 31% rise in operating income from 2023 [5]. Revenue Streams - Google advertising is the primary revenue source for Alphabet, but Google Cloud and YouTube have also shown consistent growth, contributing to an annual revenue run rate of $110 billion [6]. - Google Cloud's revenue grew 30% year over year in the fourth quarter, reaching $12 billion, driven by demand for cloud services [7]. Future Investments - Alphabet plans to invest approximately $75 billion in capital expenditures in 2025, focusing on expanding its AI capabilities and enhancing Google Cloud's competitiveness [8]. Valuation - Following recent stock price declines, Alphabet's price-to-earnings (P/E) ratio is around 20.5, below its 10-year average, suggesting the stock may be undervalued compared to other major tech stocks [9][10].