Alphabet Stock — Alphabet Inc. (NASDAQ: GOOG), the parent company of Google, is gaining renewed attention on Wall Street as its stock continues a robust rebound, even as questions swirl around whether the tech titan is a hidden bargain—or a long-term value trap.
Alphabet stock closed at $180.56 on Wednesday, up 0.31% for the day. More notably, the stock has posted a 13.53% gain over the past month and 5.24% over the last five days, showcasing strong short-term momentum after a choppy start to the year. Despite these recent gains, the stock is still down 5.67% year-to-date, reflecting a broader investor reassessment of its core businesses amid rising competition and structural challenges.
Cheapest of the ‘Magnificent Seven’—But Why?
Alphabet is currently the least expensive stock among the so-called Magnificent Seven tech giants, trading at roughly 19 times forward earnings, according to WisdomTree. That’s below the S&P 500’s average of 22.5x and well under peers like Microsoft and Amazon.
Yet some analysts warn that Alphabet’s low valuation might be less of a bargain and more of a sign of hidden structural limitations. Concerns range from AI-powered search competition (like ChatGPT and Perplexity) to regulatory headwinds, including last year’s antitrust loss that could force the company to divest Chrome or share search data with rivals.
Is Google’s Conglomerate Structure Holding It Back?
D.A. Davidson analyst Gil Luria argues that Alphabet’s tight grip on its conglomerate model is limiting the market’s ability to recognize the individual value of its powerhouse business segments.
“By keeping the conglomerate structure, management is dooming all of its businesses to the 16x search multiple,” Luria wrote, noting that standalone divisions like YouTube, Google Cloud, and Waymo could trade at higher multiples comparable to Netflix, Microsoft, or Tesla.
Luria maintains a “Neutral” rating on Alphabet with a $160 price target, but suggests a breakup could unlock a valuation closer to $300 per stock.
Long-Term Growth Remains Impressive
While the value-versus-trap debate continues, Alphabet’s long-term performance remains compelling. Over the past five years, the stock has delivered a 150% return, and since its 2004 IPO, it’s up more than 537% adjusted for stock splits.
Alphabet also has strong financial foundations. The company unveiled a $70 billion buyback program earlier this year and now pays a predictable dividend—a new feature in its capital return strategy. These initiatives help support the stock during periods of uncertainty.
Index Inclusion, ETF Activity May Boost Demand
Later this month, Alphabet is set to become the second-largest stock by weight in the Russell 1000 Value Index, due to the annual rebalancing by FTSE Russell. While it will also remain part of the Russell 1000 Growth Index, this shift is likely to prompt ETF managers to increase their Alphabet allocations, potentially increasing institutional demand.