Alphabet (GOOGL): Exploring Valuation After Recent Surge in Share Price

Alphabet (GOOGL) shares have been on an impressive run lately, climbing 15% in the past month and nearly 45% over the past 3 months. Investors seem encouraged by the company’s fundamental growth and recent performance trends.

See our latest analysis for Alphabet.

Alphabet’s recent momentum is catching plenty of attention, with investors responding to both its robust quarterly numbers and renewed optimism about long-term growth prospects. Notably, the one-year total shareholder return stands at an impressive 80%, reflecting both capital gains and reinvested dividends. This goes well beyond just share price appreciation. With positive sentiment building, the stock’s latest run could signal that the market is revisiting its growth story and risk profile for the year ahead.

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With shares hitting new highs and business fundamentals looking robust, the big question now is whether Alphabet’s stellar run leaves room for more upside, or if the market has already priced in the company’s future growth story.

Most Popular Narrative: 11.9% Undervalued

Alphabet’s last close of $299.66 is well below the narrative’s fair value benchmark, suggesting a notable gap between the current market price and what the most popular narrative expects the stock to be worth. According to oscargarcia’s narrative, this perceived undervaluation is rooted in Alphabet’s compounding strengths and its positioning for higher earnings multiples in the future.

Alphabet is a compounding machine hiding under an ad empire. With AI monetization finally catching fire, Cloud turning profitable, and more YouTube monetization coming, this is not just a “big tech stock,” it is an innovation platform priced like a mature business. You get high-margin growth, strong cash flow, a solid balance sheet, and exposure to everything from AI to driverless cars. It is tech diversification inside a single ticker.

Read the complete narrative.

What is behind this bullish view? A unique blend of robust cash generation, accelerating AI initiatives, and strong margins that challenge how the market usually values tech juggernauts. The narrative’s calculation hinges on bold assumptions that could surprise even seasoned market watchers. Want the real numbers and the logic behind them? Unlock the full details behind this forecast.

Result: Fair Value of $340.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks such as regulatory pressure and emerging AI-powered search challengers could test Alphabet’s dominance and potentially reshape the bullish long-term narrative.

Find out about the key risks to this Alphabet narrative.

Another View: Discounted Cash Flow Model Challenges the Bullish Narrative

While the popular narrative suggests Alphabet is undervalued, the Simply Wall St DCF model offers a less optimistic assessment. This approach calculates Alphabet’s fair value at $287.39, slightly below the recent market price. Does this suggest investors are pursuing growth too eagerly, or is there real long-term upside?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Alphabet for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 918 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Alphabet Narrative

If you would rather draw your own conclusions, or believe there is another angle to the story, you can shape your own view in just a few minutes. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Alphabet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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