Alphabet Inc. (GOOG): A Bull Case Theory

We came across a bullish thesis on Alphabet Inc. on Rebound Capital’s Substack. In this article, we will summarize the bulls’ thesis on GOOG. Alphabet Inc.'s share was trading at $246.57 as of September 25th. GOOG’s trailing and forward P/E were 26.29 and 23.36 respectively according to Yahoo Finance.

Alphabet (GOOGL) has proven resilient despite repeated investor concerns about disruption. Earlier in 2025, sentiment-driven fears that AI would erode its search dominance and weaken CEO Sundar Pichai’s leadership drove the stock down nearly 30%. Yet fundamentals never faltered, with ad revenues and profits continuing to grow. Since then, the stock has rebounded 60% on the back of multiple catalysts: the Google I/O 2025 event showcased Gemini 2.5 updates, new AI-powered search experiences, and creative media tools; management reported double-digit growth in search queries and revenues; AI is driving more targeted ad monetization; and a favorable antitrust ruling preserved Alphabet’s core businesses.

Alphabet’s dominance in AI stems from controlling all three pillars of the ecosystem—hardware via TPUs, foundation models with Gemini, and unmatched reach through search, YouTube, and Google Cloud. Its business remains highly diversified: search still generates over 70% of operating profit with >90% market share, YouTube boasts 2.7 billion MAUs and over 100 million premium subscribers, Cloud is a $50B run-rate business expected to double within five years, subscriptions provide $45B recurring revenue, and Waymo offers long-term optionality.

Risks remain, including rising capital expenditures—guided at $85B in 2025—and potential share loss in search to competitors like OpenAI or Perplexity. Still, Alphabet has navigated technological shifts before, as during the mobile revolution, and appears positioned to lead the AI era. With shares around $240, Rebound Capital values the company at $300/share, reflecting a 25% upside and implying further re-rating potential toward peers like Microsoft and Amazon.

Previously we covered a bullish thesis on Alphabet Inc. (GOOG) by Elliot in April 2025, which highlighted its resilient search business, accelerating cloud growth, expanding subscriptions, and AI-driven margin efficiency despite rising CapEx. The company's stock price has appreciated approximately by 51.8% since our coverage. This is because the thesis played out amid growth and investor confidence. The thesis still stands as Rebound Capital emphasizes Alphabet’s AI ecosystem dominance and valuation upside.

Alphabet Inc. is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 219 hedge fund portfolios held GOOG at the end of the second quarter which was 227 in the previous quarter. While we acknowledge the potential of GOOG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.