Is Alphabet Stock Still a Buy Below $250?

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stock has made a roaring comeback in 2025. Stock for the artificial intelligence (AI) giant and owner of Google, YouTube, Google Cloud, and Gemini is trading up 31% year to date, which is actually beating the performance of Microsoft and just slightly underperforming Nvidia. Investors are cheering on Alphabet as it keeps putting out new AI innovations that are going viral, helping it catch up to the likes of OpenAI's ChatGPT.

Despite this strong stock performance, Alphabet stock still trades at a price-to-earnings ratio (P/E) below the S&P 500 (SNPINDEX: ^GSPC) average, and significantly below its peers. Does this make Alphabet stock a buy today, as it trades just below $250 a share?

Catching up in consumer AI

For the last few years, the chatbot ChatGPT has captured most of the attention in the consumer AI landscape. It has an estimated 700 million weekly users and 190 million daily users, which is still well short of the multiple billions of people that use Google every week, but it is catching up fast. This had investors worried about potential disruptions, as AI chatbots take market share from traditional search.

Alphabet may have found its answer with the Gemini chatbot. The ChatGPT competitor only has an estimated 35 million daily users, but it has begun to grow quickly in recent months due to the launch of a new AI image generator, which sent Gemini to the top of the App Store downloads ranking. That app recently fell behind two OpenAI applications, but remains third on the list, which is significantly ahead of its historical ranking. According to Alphabet, users have created hundreds of millions of images with the new Gemini tools already.

This is not going to directly lead to revenue today, but viral usage of Gemini should help the company take back some market share lost to OpenAI and eventually lead to increased revenue in the form of subscriptions and advertising over the long term.

More than just Google and Gemini

In 2025, investors are focused on consumer AI and potential disruption from Google. While Google search revenue is still growing 12% year over year, it is not the entire Alphabet business today. Neither is Gemini.

Alphabet also owns YouTube, Google Cloud, Android, and Waymo. YouTube generated close to $10 billion in advertising revenue last quarter, while Waymo is growing exponentially with its new self-driving taxi networks in major urban areas.

The gem of Alphabet's entire business when looking at growth potential over the next five years is Google Cloud. With $54.4 billion in annual recurring revenue (ARR), 32% year-over-year revenue growth last quarter, and rapidly expanding operating margins, the cloud infrastructure segment is ripe for profit growth.

The division generated $2.8 billion in operating income last quarter. If revenue keeps growing at its current 32% year-over-year pace due to the AI spending boom, Google Cloud will reach $100 billion in ARR sometime in the near future and will likely be generating a boatload of annual profits.

Data by YCharts.

Is Alphabet stock a buy below $250?

There is a lot to like about Alphabet's business, even when considering the increased competition from OpenAI.

At just under $250, Alphabet stock now trades at a market cap of $3 trillion. This gives the stock a trailing P/E ratio of 26.5. This is compared to a P/E ratio of 39 at Microsoft and 53 at Nvidia, and is even lower than the S&P 500 average of 31 right now.

With steady growth at Google Search, explosive growth at Google Cloud, and viral engagement with Gemini, Alphabet stock still looks cheap today due to its below-market earnings ratio. Buy this stock and hold tight for at least a decade.

Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, 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.