The Motley Fool·2025-09-02 09:30Core Viewpoint - Alphabet is considered one of the most undervalued big tech stocks, with the potential to surpass the combined market capitalization of Apple and Palantir Technologies if market conditions improve and growth initiatives succeed [2][11]. Group 1: Financial Performance - Alphabet's revenue rose by 14% year over year in Q2, with diluted earnings per share increasing by 22% [6]. - Google Search, which accounts for over half of Alphabet's revenue, saw a 12% increase in revenue year over year [6]. - Alphabet generated $116 billion in net income over the past year, surpassing Apple's $99 billion [10]. Group 2: Market Position and Valuation - Currently, Alphabet trades at 22.5 times earnings, which is lower than its peers despite outperforming Apple's earnings-per-share growth for two years [8]. - If Alphabet were assigned the same premium valuation as Apple, it could be worth approximately $4.1 trillion, exceeding the combined market cap of Apple and Palantir [10]. Group 3: Growth Initiatives - Alphabet is integrating generative AI into its Google Search engine, which has become a popular feature and maintains similar monetization to traditional search [5]. - The company continues to invest in growth areas such as Google Cloud and Waymo, contributing to its overall revenue growth [6].