Is Google the Most Affordable Stock Among the “Magnificent Seven” Available Today?

Alphabet’s Stock Analysis

Alphabet currently has a lower price-to-earnings (P/E) ratio than other stocks in the so-called “magnificent seven.” Despite some concerns regarding AI disruptions, the company’s financial health remains solid. Analysts expect that stock prices could climb higher, benefiting Google Cloud significantly.

Looking at Alphabet—parent to Google, YouTube, and Google Cloud—it’s worth evaluating whether this current pricing presents a good buying opportunity. Interestingly, even amid fears about competition from AI companies like OpenAI, Alphabet’s financials don’t seem to reflect such worries. In the last quarter, the company saw a 14% year-over-year revenue increase, totaling $90.2 billion, with Google search revenues contributing significantly, despite potential disruptions from AI startups.

With various new AI tools hitting the market, including enhancements to the Gemini initiative and improved productivity features, Alphabet continues to innovate. Over the past year, the company’s revenue reached $360 billion, marking a remarkable growth of 117% over five years.

And while much of the focus is on Google search, it’s essential to note that YouTube ads, subscriptions, and Google Cloud also contribute approximately $10 billion each in quarterly revenue, all experiencing double-digit growth. This diversification should help sustain Alphabet’s financial growth, even if advertising from Google searches slows down, as some investors fear.

Currently, Google Cloud is a highlight of Alphabet’s business strategy. The 28% increase in revenue year-over-year is largely due to rising demand from AI startups for cloud services. With recurring revenues now around $50 billion annually, Google Cloud appears poised for long-term growth.

There was a time when Google Cloud suffered losses, but now it is seeing significant profitability. In the first quarter of 2025, it reported an operating profit of $2.2 billion, with a profit margin of 18%. If projections hold true, and Google Cloud’s revenues reach $100 billion in the near future, its annual operating profit could skyrocket to around $25 billion.

To provide some context, over the last 12 months, Alphabet’s total operating profit was $117.5 billion, underlining Google Cloud’s critical role in overall growth. As long as the trend of increased spending on AI continues, revenues from Google Cloud could keep rising.

Moreover, Alphabet is one of the more affordably priced stocks in this elite group of companies. Its P/E ratio stands at 18.9, which is significantly lower than Meta Platforms’ 26.7 and Microsoft’s 36. Even though these competitors are also growing, they don’t have a cloud division analogous to Google Cloud, which is currently demonstrating rapid revenue growth.

On top of all this, Alphabet’s management team is praised for its approach to returning capital to shareholders. The stock currently offers a 0.5% dividend, and the company is also reinvesting in stock buybacks while planning for future AI infrastructure and Google Cloud expansion.