Is Google Stock A Buy After It Passes A $2 Trillion Valuation?

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Ask Google’s Gemini chatbot if you should buy Alphabet (GOOG) (GOOGL) stock, and you'll get a bulleted list of pros and cons—plus a reminder that chatbots can’t provide financial advice.

It's a distilled response to a complex question. While that aligns perfectly with a chatbot’s purpose, you may be left wanting more.

Let's dive into Alphabet’s worthiness as an investment, starting with the company’s valuation, factors driving growth, risks to watch and key metrics.

Alphabet’s Market Valuation

Alphabet’s stock price at close of trading on May 28 was $178.02, equating to a market capitalization above $2.19 trillion. There are only four U.S. public companies that eclipse a $2 trillion value: MicrosoftMSFT 0.0%, AppleAAPL 0.0%, Nvidia (NVDA) and Alphabet.

Within that elite group, Alphabet has the lowest forward P/E ratio at 23.53. Microsoft’s P/E is 32.26, Apple's is 28.99 and Nvidia’s is 41.49. Alphabet also has the lowest price-to-sales and price-to-book ratios among these peers. By themselves, these ratios imply an unusual opportunity—one of the world’s most powerful and iconic technology companies may be trading at a reasonable price.

Other data corroborates this conclusion. Simply Wall St recently published a valuation of Alphabet using a discounted cash flow (DCF) model. The DCF method estimates a company's future cash flows and then adjusts those cash flows to reflect their current value. Since the math is heavily influenced by assumptions, the output is considered an indicator rather than a prediction. In this case, the analysis indicated that GOOG stock is undervalued by about 17%.

https://forbes.com/sites/investor-hub/article/is-google-stock-buy-after-2-trillion-valuation/

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