By Andrew Bary
This article is an excerpt from " Alphabet and 9 More Stocks to Buy for 2025," published on Dec. 13, 2024. To see the full list, click here.
Alphabet operates the world's dominant search engine, but the company is under a cloud due to artificial-intelligence-driven competitive challenges and the government's efforts to break it up.
As Barron's argued in a recent cover story, Alphabet should be able to fend off competitive and regulatory challenges. The stock also got a lift this past week as the company showcased the development of a quantum chip with enormous computing power. Investor Bill Ackman recently called Alphabet "one of the greatest businesses in the world."
The stock, at about $195, is the cheapest of the Magnificent Seven, trading for 21 times projected 2025 earnings, against 25 for Meta Platforms and 30 for Apple and Microsoft.
The company also looks inexpensive based on the sum of its parts, which include search, YouTube, cloud computing, and the Android operating system. It also has its "Other Bets," mainly Waymo, a leader in autonomous driving that has robo-taxis operating in four cities, compared with none for Tesla. Together, they justify a price above $250 a share.
"We think of it as a high-multiple tech stock that isn't priced like one, " says Bill Nygren, manager of the Oakmark fund.
Write to Andrew Bary at andrew.bary@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 25, 2024 00:01 ET (05:01 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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