Is Alphabet's Stock Absurdly Cheap?

Core Viewpoint - Alphabet is currently undervalued despite fears surrounding its core business being disrupted by generative AI, as it continues to show strong growth in various segments [1][10]. Group 1: Alphabet's Business Performance - Alphabet's core business, primarily driven by Google search, remains robust, generating significant cash flow that supports other ventures [3]. - Concerns about generative AI replacing Google search have not materialized, with Google search revenue increasing by 10% year over year in Q1 [4][6]. - Google Cloud, another key division, experienced remarkable growth with a 28% year-over-year revenue increase in Q1, and its operating margin nearly doubled from 9.4% to 17.8% [7]. Group 2: Stock Valuation - Alphabet's stock is trading at 17.4 times forward earnings, significantly cheaper than the S&P 500's 22.8 times forward earnings, indicating it is undervalued [9]. - The company's revenue and diluted earnings per share grew at rates of 12% and 49%, respectively, during the first quarter, suggesting strong performance [8]. - The combination of market-beating growth and a below-market price makes Alphabet a compelling investment opportunity [10].