Is Alphabet Misunderstood? Here's Why the Bulls Are Buying

Core Viewpoint - Alphabet's stock has faced significant declines in 2025, down 27% from its 52-week high and 20% year-to-date, indicating a bear market situation [1][2] - Legal challenges, including a federal ruling labeling Google as an illegal monopolist in online advertising, have added to investor anxiety [2][13] Valuation and Financial Performance - Alphabet's current P/E ratio stands at 18.30, down from a historical average of approximately 28, with a forward P/E ratio of 15, suggesting a potentially undervalued position [4][11] - The company reported a revenue of $96.47 billion for Q4, slightly below expectations, and earnings per share (EPS) of $2.15, which slightly beat estimates [11][12] - Analysts project EPS of $2.01 for the March 2025 quarter, indicating resilience in earnings growth [12] Business Resilience and Growth Drivers - Alphabet's core revenue from digital advertising is less exposed to global supply chain risks compared to peers like Apple and Tesla, providing a competitive advantage [6][7] - The company has a strong global presence, with over half of its revenue generated outside the U.S., reducing dependency on politically sensitive markets [7] - Alphabet is integrating generative AI into its services, maintaining its search dominance and enhancing its competitive edge through platforms like Android, Chrome, and YouTube [8][9] Future Outlook - Despite current legal troubles and stock performance, Alphabet's long-term fundamentals remain strong, presenting a potential buying opportunity for investors [13] - The stock has a price target of $200.74, indicating a potential upside of 36.3% from its current price of $147.32 [10][11]