The Alphabet Dilemma: Value Trap Horror, Or Investment Bliss?

Summary

  • In the after-hours session today, Alphabet Inc. delivered strong Q2 2025 results, with robust growth across Search, YouTube, and Cloud, driven by AI innovation.
  • Despite increased AI-driven CAPEX pressuring free cash flow, Alphabet remains fundamentally healthy and trades at a discount to big tech peers.
  • My valuation model shows GOOGL stock is about 15% overvalued absolutely, but a 5-year CAGR of 11.5% justifies a continued Buy rating.
  • Given technical signals of potential near-term highs and possible correction, I strongly recommend staggered accumulation over lump-sum buying.
  • Looking for a portfolio of ideas like this one? Members of The Quantamental Investor get exclusive access to our subscriber-only portfolios. Learn More »

The Search Engine. Technology Concept

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Introduction

In my previous report on Alphabet, Inc. (NASDAQ:GOOGL, NASDAQ:GOOG, GOOG:CA), aka Google, I highlighted the digital advertising giant as a fairly valued monopoly worth buying for the long run amid widespread fears of AI-powered disruption.

Since then, Alphabet's

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I am Ahan Vashi, a seasoned investor with professional background in equity research, private equity, and software engineering. I currently serve as the Chief Financial Engineer at The Quantamental Investor, a community pursuing financial freedom through bold, active investing with proactive risk management.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of GOOG, GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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