Finance
The recent tech sell-off has made this artificial intelligence (AI) stock an even better buy
Buy Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) Stocks are rarely a bad idea.
Imagine picking up $1,000 worth of Alphabet stock on February 25, 2014. That turned out to be the worst day of that year to get into the tech giant’s stock. That day’s peak, at a record price of $30.50 per split share, was followed by an 18% decline over the next ten months. The bear bait piled up as European regulators considered breaking up the company, sales of Android phones struggled, top executives left and new product ideas like Google Glass and Waymo’s self-driving cars failed to catch on.
That’s okay though. If you had held on to that $1,000 investment through thick and thin, you would have a market-beating $5,310 in your pocket about a decade later.
Alphabet shares have stumbled before and then come back swinging
Of course, you would have done even better if you had invested in Alphabet on any other day that year, but the company overcame its problems and edged out the broader market even from the worst possible starting point of 2014. I expect future generations to do similar things will say. about buying Alphabet stock in 2024 — that investment should beat the market for many years or even decades to come, no matter how poorly you timed the purchase.
Time in the market beats market timingyou know. And this company is built to last for a very long time.
I can’t think of any company that is more likely than Alphabet to deliver robust returns in 2040, 2050 and beyond. That terrible price drop in 2014 is now a barely noticeable graph squiggle. And Alphabet’s operating results continued to grow:
Alphabet stock is a bargain right now
Wait, it still gets better. In addition to Alphabet’s tanky staying power, the stock is unusually affordable right now.
After hitting another all-time high of $191.40 per share in July, Alphabet shares are down 15% to around $162 per share. As I write this, they trade at 23.4 times earnings, with a price-to-earnings-growth (PEG) ratio of 1.1. These are the most affordable earnings-based valuation ratios among the ‘Magnificent Seven’ of tech giants.
Additionally, Alphabet has played a leading role in the artificial intelligence (AI) boom. Google Cloud is a popular cloud computing platform where other companies can train and manage their own AI platforms. The Google Gemini chatbot competes directly with OpenAI’s ChatGPT in language understanding and generation. The company is poised to leverage generative AI as a long-term growth catalyst.
I could go on, but you get my point. Alphabet stock was a great investment before the recent sell-off, and it’s an even better buy today. Market sell-offs can be your friend if you want to invest in a great company like Alphabet.
Should you invest €1,000 in Alphabet now?
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Alphabet and Vanguard S&P 500 ETF. The Motley Fool holds positions in and recommends Alphabet and Vanguard S&P 500 ETF. The Motley Fool has one disclosure policy.
The recent tech sell-off has made this artificial intelligence (AI) stock an even better buy was originally published by The Motley Fool
