Is Google Stock Undervalued At $156?

Regardless of a 18% inventory decline this yr, pushed by investor apprehension over potential commerce tensions – together with President Trump’s not too long ago proposed car tariffs and potential will increase on European and Canadian items – we discover Alphabet (NASDAQ:GOOG) inventory to be a sexy decide at its present value of about $156.

This conclusion is supported by our evaluation evaluating Google’s current valuation with its working efficiency in recent times, alongside its present and historic monetary standing. Whereas the present administration’s tariff and immigration insurance policies have rekindled inflation anxieties, hinting at potential financial turbulence that might affect tech shares, it’s essential to acknowledge that these near-term macroeconomic headwinds don’t alter Google’s long-term prospects. Individually, one other inventory moved virtually 150% over the previous two years. See What’s Behind The 150% Rise In Amazon Stock?

Moreover, Google has demonstrated higher resilience than the broader market throughout one of many two latest financial downturns. Our detailed evaluation of Alphabet throughout key metrics comparable to Development, Profitability, Monetary Stability, and Downturn Resilience confirms the corporate’s very sturdy working efficiency and monetary situation, as detailed within the following sections. That stated, if you happen to search upside with decrease volatility than particular person shares, the Trefis High-Quality portfolio presents an alternate – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

How Does Google’s Valuation Look vs. The S&P 500?

Going by what you pay per greenback of gross sales or revenue, GOOG inventory seems barely costly in comparison with the broader market.

• Alphabet has a price-to-sales (P/S) ratio of 6.0 vs. a determine of three.2 for the S&P 500
• Moreover, the corporate’s price-to-operating earnings (P/EBIT) ratio is 18.7 in comparison with 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 16.8 vs. the benchmark’s 24.3

How Have Google’s Revenues Grown Over Current Years?

Alphabet’s Revenues have seen notable progress over latest years.

• Alphabet has seen its prime line develop at a mean price of 10.8% during the last 3 years (vs. enhance of 6.3% for S&P 500)
• Its revenues have grown 13.9% from $307 Bil to $350 Bil within the final 12 months (vs. progress of 5.2% for S&P 500)
• Additionally, its quarterly revenues grew 11.8% to $96 Bil in the newest quarter from $86 Bil a yr in the past (vs. 5.0% enchancment for S&P 500)

How Worthwhile Is Google?

Alphabet’s revenue margins are a lot greater than most firms within the Trefis protection universe.

Does Google Look Financially Steady?

Alphabet’s stability sheet seems very sturdy.

• Alphabet’s Debt determine was $25 Bil on the finish of the newest quarter, whereas its market capitalization is $2.0 Trillion (as of three/26/2025). This means a very sturdy Debt-to-Fairness Ratio of 1.2% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Money (together with money equivalents) makes up $96 Bil of the $450 Bil in Whole Belongings for Alphabet. This yields a sturdy Money-to-Belongings Ratio of 21.2% (vs. 14.8% for S&P 500)

How Resilient Is GOOG Inventory Throughout A Downturn?

GOOG inventory has seen an affect that was barely higher than the benchmark S&P 500 index in one of many two latest downturns. Whereas traders have their fingers crossed for a delicate touchdown by the U.S. financial system, how dangerous can issues get if there may be one other recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key shares fared throughout and after the final six market crashes.

Inflation Shock (2022)

• GOOG inventory fell 43.6% from a excessive of $148.04 on 2 February 2022 to $83.49 on 3 November 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 23 January 2024
• Since then, the inventory has elevated to a excessive of $207.71 on 4 February 2025 and at the moment trades at round $165

Covid Pandemic (2020)

• GOOG inventory fell 30.8% from a excessive of $76.33 on 19 February 2020 to $52.83 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The inventory totally recovered to its pre-Disaster peak by 10 July 2020

Placing All The Items Collectively: What It Means For GOOG Inventory

In abstract, Alphabet’s efficiency throughout the parameters detailed above are as follows:

• Development: Very Sturdy
• Profitability: Very Sturdy
• Monetary Stability: Extraordinarily Sturdy
• Downturn Resilience: Impartial
• Total: Very Sturdy

Alphabet’s present valuation of roughly 6x trailing revenues, whereas barely greater than the S&P 500 common, stays marginally beneath its personal five-year price-to-sales (P/S) ratio of 6.2x. We consider that this positioning creates an enticing entry level. The corporate’s promising earnings progress potential, pushed by strategic AI initiatives and the continued momentum in its cloud division, suggests {that a} premium valuation just isn’t solely justified however doubtlessly undervalued.

The power of Alphabet’s efficiency throughout key enterprise segments helps our view that Google inventory represents a compelling funding alternative at $165. The corporate’s skill to innovate, significantly in AI and cloud applied sciences, positions it to doubtlessly broaden its valuation a number of past historic averages, making it a sexy decide for traders searching for progress and technological management.

Whereas it seems like there may be upside to GOOG inventory, the Trefis Reinforced Value (RV) Portfolio, has outperformed its all-cap shares benchmark (mixture of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to provide sturdy returns for traders. Why is that? The quarterly rebalanced mixture of large-, mid- and small-cap RV Portfolio shares supplied a responsive method to benefit from upbeat market situations whereas limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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