Alphabet (GOOGL, Financial), the parent company of Google, has seen its stock rise nearly 38% over the past year, outperforming tech giants like Apple (AAPL) and Microsoft (MSFT). Despite reaching a historic high of approximately $200 per share, analysts are questioning if the stock has peaked. Wall Street remains optimistic, with the average target price at an all-time high.
Following Alphabet's Q3 2024 earnings and profits surpassing market expectations, firms like Morgan Stanley, Evercore ISI, Jefferies, and Wedbush have reiterated their bullish stance and raised target prices. Despite recent gains, Alphabet's relative valuation appears favorable for long-term growth.
Stone Fox Capital from Seeking Alpha expressed that even with high valuations, Alphabet remains attractive compared to other major tech stocks. The expected P/E ratio for Alphabet is around 22, compared to Apple's and Microsoft's 30. Similarly, Star Investments noted that Alphabet's P/E ratio is the lowest among peers like Amazon and Nvidia, and its stock is discounted compared to its 7-year and 10-year median P/E ratios.
Investors seeking robust growth at a reasonable price should consider buying Alphabet, according to Star Investments. Luca Socci from Seeking Alpha believes that the value of Alphabet's self-driving taxi unit, Waymo, is not fully reflected in its market capitalization, suggesting potential for valuation expansion if Waymo continues its growth.
However, some analysts are cautious. DT Invest recently rated Alphabet as "hold," stating the stock, at about $190 per share, seems nearly perfectly valued with limited upside potential. Hunting Alpha also maintained a "hold" rating, citing resistance levels.
