This Leading Artifical Intelligence (AI) Stock Is Absurdly Cheap Right ...
Artificial intelligence (AI) investing continues to be at the forefront of most investors' minds. There is a lot to come from this technology, and we've barely scratched the surface. One AI stock that is fairly cheap right now is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and it is one of the best stocks to buy at the moment.
Alphabet’s Strength in Generative AI
Alphabet, as Google's parent company, is well-positioned in the generative AI arms race. The company's generative AI platform, Gemini, while not in the top position, is highly regarded in the industry. Despite this, Alphabet's main revenue source remains advertising, with 75% of its revenue coming from ads in Q3.
Integration with Advertising Services
The integration of Gemini into Google Ads allows for the creation of ad campaigns that adapt to individual consumers quickly. This competitive edge in advertising ensures that Google remains a top choice for clients looking for a strong return on their advertising investment.
Google Cloud Computing Division
Aside from advertising, Alphabet also has Google Cloud, its cloud computing division. With the increasing demand for computing power for AI models and workloads, cloud computing is a crucial industry. Alphabet's cloud computing segment is expected to see significant growth as companies rely on cloud providers to run their AI platforms continuously.
Valuation and Earnings Growth
Despite the release of DeepSeek's R1 model, Alphabet remains poised to benefit from the AI arms race. Currently, Alphabet's stock is trading at a reasonable valuation, with a forward P/E ratio slightly lower than the S&P 500. In Q3, Alphabet reported a 15% increase in revenue year over year, with a notable jump in earnings per share.
As Alphabet prepares to release its Q4 earnings, potential discussions around AI spending may arise. Nevertheless, Alphabet's ability to adapt and optimize its AI models could lead to strong earnings growth in the long term.
Opportune Time for Investment
Despite market volatility, now could be an excellent time to invest in Alphabet at a discounted price. The company's strength in AI platforms and core businesses makes it a compelling choice for investors looking for long-term growth opportunities.
Before making any investment decisions, investors should carefully consider market trends and potential risks. While Alphabet continues to be a top stock pick, exploring a diversified portfolio strategy is advisable.
*Stock Advisor returns as of January 27, 2025
