Wondering if Alphabet is still a buy after such a huge run, or if you would just be chasing past gains? This article is going to unpack what the current price really implies about future returns.
The stock is up 11.3% over the last month and an impressive 66.7% year to date, with a massive 81.9% gain over the past year and more than tripling over 3 and 5 years. This naturally raises the question of how much upside is left from here.
Recently, sentiment around big tech and AI leadership has kept Alphabet firmly in the spotlight, with investors increasingly treating it as one of the core winners from the AI infrastructure and tools boom. At the same time, ongoing regulatory scrutiny around antitrust and privacy, as well as shifting digital ad dynamics, have added some nuance to the risk side of the story.
On our checklist of six valuation tests, Alphabet only passes 2, giving it a 2/6 valuation score. We will walk through what traditional metrics like discounted cash flow and multiples are saying, then finish by exploring a more narrative driven way to think about whether the market is really pricing Alphabet correctly today.
Alphabet scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow model projects the cash Alphabet is expected to generate in the future, then discounts those projections back to what they are worth in $ today to estimate an intrinsic value per share.
Alphabet generated about $92.6 billion of free cash flow over the last twelve months, and analysts expect this to compound steadily, with Simply Wall St extrapolating beyond the initial analyst window. On these assumptions, free cash flow is projected to rise to roughly $257.8 billion by 2035, with a series of gradually slowing growth rates as the business matures.
When all those future cash flows are discounted back to today using a 2 Stage Free Cash Flow to Equity framework, the model arrives at an intrinsic value of about $289.53 per share. Compared with the current market price, that implies the stock is roughly 9.1% overvalued, which is close enough to suggest the market is largely in the right ballpark.
Result: ABOUT RIGHT
Alphabet is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
GOOGL Discounted Cash Flow as at Dec 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Alphabet.
For a consistently profitable, mature business like Alphabet, the price to earnings ratio is a useful shorthand for how much investors are willing to pay for each dollar of current earnings. It captures both what the business is earning today and what the market expects those earnings to do over time.
In practice, higher expected growth and lower perceived risk usually justify a higher, or more generous, PE multiple, while slower growth or higher uncertainty argue for a lower one. Alphabet currently trades on about 30.7x earnings, which is above the broader Interactive Media and Services industry average of 16.4x, but below the 48.1x being paid for its faster growing big tech peers.
Simply Wall St takes this further with its Fair Ratio framework, which estimates what a reasonable PE should be given Alphabet’s specific growth outlook, profitability, risk profile, industry and market cap. For Alphabet, that Fair Ratio is 37.3x, which indicates that investors are paying less than what might be expected for a business with this quality and growth profile.
Result: UNDERVALUED
NasdaqGS:GOOGL PE Ratio as at Dec 2025
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Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Alphabet’s story to a set of concrete forecasts for its revenue, earnings, margins and fair value, then compare that fair value to the current share price to decide whether you think it is a buy or a sell today.
In practice, a Narrative on Simply Wall St’s Community page lets you turn your big picture thesis into numbers. Your outlook on Alphabet’s AI leadership, advertising resilience or cloud momentum automatically links to a living financial model that updates dynamically as new earnings, news and product announcements come in.
For example, one Alphabet Narrative might assume a fair value near $171 per share based on slower growth and more conservative margins. Another might see fair value closer to $340 because it expects faster AI monetisation and a higher future PE multiple. By browsing these side by side you can quickly see which story, and which price, best matches how you believe Alphabet’s future will actually play out.
For Alphabet however we will make it really easy for you with previews of two leading Alphabet Narratives:
🐂 Alphabet Bull Case
Fair value: $340.00 per share
Implied undervaluation vs current price: -8.3%
Underlying revenue growth outlook: 17.36%
Sees Alphabet as a cash generating compounder, with dominant digital ads, a now profitable Google Cloud, and deep AI leadership powering long term growth across Search, YouTube and Workspace.
Argues that Berkshire Hathaway’s stake adds a Buffett premium by reinforcing Alphabet’s moat quality, earnings durability and management discipline, supporting a higher future P/E multiple.
Highlights a fortress balance sheet with large cash reserves, minimal debt and aggressive buybacks, suggesting Alphabet can keep compounding even through regulatory and macro headwinds.
🐻 Alphabet Bear Case
Fair value: $212.34 per share
Implied overvaluation vs current price: 48.7%
Underlying revenue growth outlook: 13.47%
Expects solid but more measured growth from digital ads and cloud, with Alphabet benefiting from long term industry tailwinds but not delivering explosive upside from current levels.
Views generative AI as ultimately sustaining rather than disruptive for Alphabet, but notes high AI compute costs, regulatory risk and potential search cannibalisation as reasons to temper valuation.
Assumes strong margin expansion from cost cutting and cloud scaling, yet still concludes that today’s share price already incorporates much of that improvement, leaving a limited margin of safety.
Do you think there’s more to the story for Alphabet? Head over to our Community to see what others are saying!
NasdaqGS:GOOGL Community Fair Values as at Dec 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include GOOGL.
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