Google Cloud Revenue Just Surged 48%. Is Alphabet the Best AI Stock to Buy Now?

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) reported Q4 2025 results past Tuesday. Google's genitor institution eclipsed Wall Street's estimates crossed the board, with a 2.4% gross astonishment and 6.8% outperformance connected the bottommost line.

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Google Cloud was the prima of the show. Sales roseate 48% twelvemonth implicit twelvemonth to $17.7 billion, accounting for a beefy 15.5% of Alphabet's full revenues. The segment's operating income besides soared, rising 154% to $5.3 billion.

These results amusement however Alphabet taps into the artificial quality (AI) boom. However, the banal took a dive aft the study arsenic investors focused connected Alphabet's tremendous AI infrastructure spending plans.

Was the terms driblet appropriate, oregon is Alphabet the champion AI banal to bargain close now? Let's instrumentality a look.

As of Feb. 6, Alphabet's banal has fallen 6.5% since the Q4 report. The banal is trading astatine prices not seen since Jan. 20, besides known arsenic "a mates of weeks ago." So, it's not a monolithic terms cut, but inactive a heavy capable driblet to rise eyebrows. With a $3.9 trillion marketplace cap, Alphabet mislaid astir $250 cardinal of marketplace worth successful 3 days.

When giants stumble, Wall Street shakes. However, Alphabet remains the champion performer among the "Magnificent Seven" stocks implicit the past year. The banal has gained 68%, acold up of Nvidia's (NASDAQ: NVDA) runner-up leap of 47%.

You tin look astatine Alphabet's valuation from respective angles.

• Equipped with a accepted worth capitalist toolkit, you tin telephone Alphabet reasonably valued oregon adjacent overvalued. The banal is changing hands astatine 30 times trailing net and 9.6 times income -- a spot lofty but not terribly precocious successful the tech sector.

• Adding net maturation to the analysis, Alphabet inactive looks modest. The guardant price-to-earnings ratio is 24x today, and the price/earnings-to-growth (PEG) ratio stands astatine 2.0. These growth-oriented metrics are connected the uncomfortable broadside of fair.

• But what if the forward-looking net maturation estimates are excessively conservative? The expert statement points to a five-year mean of 12.3% per year, which is 1 of the lowest Magnificent Seven readings. That would beryllium a important slowdown from the existent five-year maturation complaint of 30%, which sounds just enough. Large and mature companies thin to dilatory their net maturation successful the agelong run, aft all.