Alphabet Stock Becomes a Low-Risk, High-Reward Play

Key Points

• Alphabet has officially entered a bear market, down over 22% from its 52-week high.
• Despite challenges, GOOGL's forward P/E of 15 suggests it is nearing value territory, with key support around $150–$155.
• Alphabet’s $32 billion acquisition of cloud security startup Wiz signals a significant investment in strengthening Google Cloud’s competitive position against Microsoft and Amazon.

Shares of Alphabet Inc. NASDAQ: GOOGL, Google's parent company, have officially entered a bear market, down 22% from their 52-week highs. The decline is part of a broader selloff in U.S. equities, driven by trade war threats, tariffs, and capital outflows into outperforming European, Asian, and emerging markets.

Growth-focused tech stocks, especially some of the world's leading technology stocks, like the Magnificent Seven, have been hit particularly hard since the start of the year.

However, steep sell-offs often create buying opportunities. With GOOGL trading just 9% above its 52-week low and near key support around $155, is it a bargain buy?

Should Investors Buy GOOGL at This Valuation?

The current sell-off has brought GOOGL’s valuation closer to historically attractive levels. While the stock's current price-to-earnings (P/E) ratio is 20, its forward P/E of nearly 18 suggests it is approaching value territory. Its positioning near higher-timeframe support, between $150 and $155, could indicate that a favorable risk-reward setup for investors is beginning to form.

But it’s not that simple.

Market Concerns: Challenges Alphabet Still Faces

On February 4, 2025, Alphabet reported its Q4 2024 earnings. The company posted revenue of $96.47 billion, slightly below expectations of $96.56 billion. Earnings per share (EPS) came in at $2.15, narrowly beating estimates of $2.13. Google Cloud revenue grew 30% year-over-year to $11.96 billion but missed forecasts of $12.19 billion, highlighting capacity constraints in its AI-driven cloud offerings.

Meanwhile, YouTube ad revenue outperformed expectations, reaching $10.47 billion versus the anticipated $10.23 billion. Total annual revenue for 2024 grew 14% to $350 billion.

Despite strong performance in Search and YouTube, Alphabet faces several headwinds. The cloud division’s revenue miss highlights stiff competition with Microsoft and Amazon, compounded by capacity constraints limiting AI-driven cloud expansion.

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Additionally, Alphabet’s aggressive $75 billion capital expenditure plan for 2025, well above Wall Street’s $58.84 billion projection, has raised profitability concerns, triggering a 9% after-hours stock drop following the earnings release.

Regulatory challenges also remain. In 2024, Alphabet lost a major antitrust case, with potential remedies such as divesting Chrome or Android. Meanwhile, competition from cost-efficient AI models, like those from China’s DeepSeek, ChatGPT, and Elon Musk’s Grok AI, threatens Alphabet’s potential dominance in AI search monetization.

These uncertainties contribute to ongoing selling pressure.

Google’s Largest Acquisition: A Strategic Move

On March 18, 2025, Alphabet announced its largest acquisition to date: a $32 billion all-cash deal to acquire Wiz, Inc., a New York-based cloud security startup. Founded in 2020 by Israeli entrepreneurs, Wiz specializes in real-time threat detection and multi-cloud security solutions across AWS, Microsoft Azure, and Google Cloud.

The acquisition, which is set to close in 2026, aims to strengthen Google Cloud’s security offerings and better position it against Microsoft and Amazon. Notably, Alphabet had previously attempted to acquire Wiz for $23 billion in 2024, but the deal collapsed over antitrust concerns.

This latest move signals Google’s commitment to expanding its enterprise cloud security business and leveraging Wiz’s estimated $500–$700 million annual recurring revenue.

GOOGL Stock: Is the Risk-Reward Profile Attractive?

Despite mixed sentiment and sector-wide selling, Alphabet’s current valuation and technical positioning suggest a potential upside. Analysts rate the stock as a Moderate Buy, and the consensus price target is $210, a potential gain of 31% from current levels.

While risks remain, including regulatory scrutiny, cloud competition, and AI monetization challenges, Alphabet’s strong fundamentals and recent strategic moves may present a compelling buying opportunity at these levels.