$GOOGL (+0,97 %) Currently sits at a 26 P/E ratio. Stock at all time highs. Is the stock undervalued or overvalued?
Google has been a pioneer in the AI race. However, my feeling is that investors are a bit afraid of competition that could result in a reduction of traffic in google search, therefore less earnings for the company.
Google continues to deliver strong financials, with Q2 2025 revenue up 14% year-over-year to $96.4 billion and operating income above $31 billion. Search advertising remains the core engine, generating over $54 billion in the quarter, while YouTube (+13% YoY to $9.8B) and Cloud (+~20% YoY to $13.6B) provide diversification. The company trades at 26x earnings, supported by robust free cash flow and consistent double-digit growth, but that valuation already assumes Alphabet can successfully monetize AI.
The risk lies in shifting user behavior: AI overviews and chatbots are reducing click-through rates, with some publishers reporting traffic losses of 40–70%. Competition and regulatory pressure also threaten search dominance, which could shrink Google’s ad revenue.
Given the strong fundamentals but real structural risks, my feeling is that the stock looks closer to fairly valued or slightly overvalued.
What are your thought on $GOOG (+1,15 %) ?
