The Smartest Growth Stock to Buy With $1,000 Right Now

Key Points

• Alphabet turned in yet another solid quarter of financial results.

• It is a leader in cloud computing, AI, streaming, and robotaxis, all of which could be long-term tailwinds.

• The stock looks reasonably valued compared to its peers.

• 10 stocks we like better than Alphabet ›

Google's parent company, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), is finally bouncing back. The tech leader started the year on a sour note, with its shares moving in the wrong direction for the better part of the first five months of 2025. Alphabet has performed significantly better since May, and the stock is now up 5% year to date as of market close Aug. 21, although that still trails the S&P 500's 8% performance. And there is plenty of upside left for the company. Here's why it is the smartest stocks to buy with $1,000 right now.

Image source: Getty Images.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Excellent financial results

Alphabet's shares have been punished partly because the company seems exposed to legal and regulatory risks, with antitrust cases hanging over its head. While that's ongoing, Alphabet continues to post excellent financial results. In the second quarter, the company's revenue increased by 14% year over year to $96.4 billion. Operating margin remained flat at 32%, while its net earnings per share increased to $2.31, 22.2% higher than in the second quarter of 2024.

Several factors drove Alphabet's strong performance. The company's advertising business remains strong despite competition from artificial intelligence (AI) chatbots. Some thought ChatGPT would mean the death of Alphabet's core business, but the company has adapted, notably by launching AI Overviews to its search results. The numbers show the success of this initiative. Alphabet estimates that AI Overviews have increased queries (for the sort it applies to) by 10%. AI Overviews also have more than 2 billion monthly users.

AI is improving Alphabet's business elsewhere, especially in its cloud division, an industry where it remains a leader. The company's Google Cloud is growing its sales much faster than the rest of the business, at a rate of 31.7% year over year during the second period.

Alphabet offers a range of AI services through the cloud, which is helping to increase demand for cloud-based services. However, it's still only just getting started, as we are still in the early innings of the AI revolution. It should be a massive tailwind for Alphabet for years to come. The company has several other segments with attractive growth prospects as well. Alphabet's YouTube is a leader in streaming that should benefit from the ongoing cord-cutting trend. Then there is Waymo, Alphabet's autonomous vehicle project.

For now, the company gets very little revenue from this project, but it is expanding its reach in cities where it is already operational, such as Los Angeles and Austin, and entering new territories like Atlanta. It may take some time for robotaxis to become mainstream in major American cities, but Alphabet already has a strong presence in this field that could grow significantly in the long run. Between that and Alphabet's cloud, AI, and streaming businesses, Alphabet's prospects look attractive.

Reasonable valuation

Alphabet isn't just a leader in several industries with bright futures. The company's shares also appear reasonably valued at current levels, especially when compared to similarly sized peers.

GOOG PE Ratio (Forward) data by YCharts

For additional context, the average forward price-to-earnings ratio for the S&P 500 is 22.3, also higher than Alphabet's. Some would argue that several of these companies deserve a higher premium than Alphabet, but it's doubtful that's the case for all of them. For instance, Apple's revenue growth hasn't been that impressive in recent years, and it trails its tech peers in the AI race by some margin.

Amazon's biggest source of profits by far, its cloud computing service Amazon Web Services, grew its sales slower than Alphabet's cloud division in the second quarter and has been losing ground to its closest competitors, including Microsoft. Apple and Amazon may still be attractive to long-term investors, but Alphabet appears undervalued by comparison at present. Again, that might be because the market is factoring in legal and regulatory risks, but even with that taken into account, the stock remains attractive.

Alphabet's valuation paired with its long-term outlook makes it one of the best growth stocks to buy right now with $1,000. With that much, investors can acquire four of the company's shares.

Should you invest $1,000 in Alphabet right now?

Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

Now, it’s worth noting Stock Advisor’s total average return is 1,057% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Prosper Junior Bakiny has positions in Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.