Is Alphabet Too Cheap to Ignore After Its Recent Correction?

Core Viewpoint - Alphabet's stock has faced a nearly 10% decline year-to-date, reflecting broader market trends shifting away from high-growth tech stocks to safer assets [1][2] Group 1: Market Performance - Alphabet's stock price is currently $168.19, with a 52-week range between$147.21 and $207.05 [1] - The company has a dividend yield of 0.48$210.59 indicating a potential upside of 25.44% [1][9] Group 2: Competitive Landscape - Google's search business, which is crucial for its valuation, is facing competition from AI-driven platforms like OpenAI's ChatGPT and xAI's Grok, which provide synthesized answers that may reduce traditional search usage [3][5] - Despite this competition, Google maintains a dominant market share of approximately 88% in U.S. search, with search and other revenue reaching $54 billion in Q4 2024, a 12.5$75 billion capital spending plan for 2025, a 43% increase from 2024, aimed at bolstering its AI and cloud infrastructure [9] - Although there was a slight revenue miss in Q4 2024, Alphabet's core businesses showed resilience, with YouTube ad revenue at $10.47 billion and Google Cloud revenue growing 30$11.96 billion [10] - Analysts project full-year EPS growth of 14-16%, with Alphabet trading at a historically low valuation given its significant investments in AI [11] Group 5: Technical Analysis - Alphabet's stock recently found support after dropping below $160 and has since reclaimed the$170 level, indicating a potential short-term bottom and upside if market sentiment improves [12] Group 6: Investment Consideration - Despite recent pullbacks due to market weakness and AI competition concerns, Alphabet's strong financials, continued search dominance, and aggressive AI investments suggest the stock may be undervalued and present an attractive opportunity for long-term investors [13]