There's an ongoing debate among investors about whether Alphabet Inc. (Google) is a good buy right now, especially after its recent earnings call led to a slight dip in stock price. As of February 12th, Google’s Class C stock is priced at $185.42, down 3.03% in the last five days and 3.57% over the past month. However, despite this short-term decline, it remains up 24.68% over the past year, reflecting strong long-term performance.
What Happened During Google's Earnings Call?
Recently, Alphabet reported its Q4 2024 earnings, which had mixed results. The company beat earnings per share (EPS) expectations by 1.07%, but it missed revenue projections by less than 1% (0.21%). While this revenue miss was minor, many investors tend to sell stocks after earnings calls, especially when expectations aren’t perfectly met. This led to a temporary selloff, pushing the stock price down from $192–$193 to around $185.
Analyst Ratings and Market Sentiment
Despite the dip, Google stock still holds strong ratings from analysts. According to Robinhood's analyst ratings, out of 67 analysts, 79% rate it a buy, while 21% suggest holding—and none are recommending selling even after the earnings report. This signals confidence in Google's long-term growth prospects.
Valuation and PE Ratio
One of the key factors in determining whether a stock is a good buy is its price-to-earnings (PE) ratio. Google’s Class C stock has a 24.01 PE ratio, while Class A stock sits at 23.04, making it fairly valued when compared to the S&P 500. Many investors prefer stocks with a PE ratio under 25, which Google falls within. While some analysts caution against stocks with PE ratios over 20, Google’s valuation appears reasonable for a dominant tech company.
Google’s Market Dominance and Future Prospects
Google is a global leader in several key industries. It dominates search, is a major force in advertising, and owns YouTube, the world's largest video platform. Additionally, Google is a major player in cloud computing and AI, two areas expected to see significant growth. The company recently launched Gemini 2.0, its latest AI model, and has committed to spending $75 billion in 2025 on AI and infrastructure, further solidifying its leadership in these sectors.
Growth in Advertising and YouTube
Alphabet’s revenue for Q4 grew 12% year-over-year, with strong performances in Google Search, YouTube, and advertising. YouTube’s advertising revenue increased 14%, driven in part by election-related ads and the rise of YouTube Shorts, its competitor to TikTok. Shorts now account for 15% of YouTube’s U.S. viewership on connected TVs, highlighting Google’s ability to adapt and compete in the social media space.
AI and Cloud Expansion
Google Cloud, another major growth driver, grew 30% year-over-year, fueled by AI-powered solutions and strong demand for cloud infrastructure. This suggests that Google is positioning itself well to capitalize on the AI boom, a sector that is expected to drive tech growth in the coming years.
Company Strength and Employee Sentiment
Another indicator of a company’s strength is how employees view its management and culture. Google has a 4.3/5 rating on Glassdoor from over 61,000 employees, with 84% recommending the company to a friend and 75% approving of CEO Sundar Pichai. This shows that Google remains a well-managed, employee-friendly company, which often translates into long-term business success.
Final Thoughts: Is Google a Buy?
Considering Google’s reasonable valuation, strong market position, growth in AI and cloud computing, and positive analyst sentiment, I believe Google remains a solid long-term investment. While the stock saw a slight dip after earnings, its long-term outlook remains strong due to its leadership in AI, search, and digital advertising.
Personally, I bought a partial investment in Google after the dip, using about half of my usual monthly investment budget. I see Google as one of the top 5–10 companies poised for long-term growth. While it may not see the rapid gains of newer stocks like Nvidia or emerging AI companies, it remains a stable and powerful force in the tech industry.
For long-term investors who believe in the future of AI, cloud computing, and digital advertising, Google remains a strong buy at its current valuation.
