buy Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stocks are rarely a bad idea.
Imagine picking up $1,000 in Alphabet stock on February 25, 2014. That was the worst day of the year to get into the tech giant’s shares. The day’s peak, at a record price of $30.50 per split-adjusted share, was followed by an 18% plunge over the next 10 months. Bear bait is piling up as European regulators consider cracking down on the company, Android phone sales struggle, top executives leave, and new product ideas like Google Glass and Waymo’s self-driving car fail.
But that’s okay. If you’ve held on to your $1,000 investment through thick and thin, you’ll have a market-beating $5,310 in your pocket roughly 10 years from now.
Alphabet stock has stumbled before — and is back swinging
You would have done better if you had invested in Alphabet any other day of the year, but the company managed to overcome these problems and beat the broader market even from the worst starting point in 2014. I expect the next generation to say the same about buying Alphabet shares in 2024 – the investment should beat the market for years or even decades, regardless of whether you have time to buy.
Timing the market beats timing the market, you know. And this company was built for a very long time.
I can’t think of a single company more likely than Alphabet to generate steady returns in 2040, 2050, and beyond. This shocking price drop in 2014 is a chart squiggle that is almost undetectable today. And Alphabet’s business results continue to grow:
Alphabet shares are currently underpriced
Wait – it still gets better. On top of Alphabet’s tank-like durability, the stock is currently very affordable.
After hitting another all-time high of $191.40 per share in July, Alphabet stock has retreated 15% to about $162 per share. As I write this, they trade at 23.4 times trailing earnings with a price-to-earnings-to-growth (PEG) ratio of 1.1. This is the most affordable price-to-earnings ratio among the “Magnificent Seven” tech giants.
In addition, Alphabet has taken a leading role in the artificial intelligence (AI) boom. Google Cloud is a popular cloud computing platform where other companies can train and run their own AI platforms. Google’s Gemini chatbot competes directly with OpenAI’s ChatGPT in language understanding and generation. The company is poised to leverage generative AI as a long-term growth catalyst.
I could go on, but you know what I mean. Alphabet stock was a good investment before it sold, and an even better buy now. Selling the market can be your friend when you want to invest in big companies like Alphabet.
Should you invest $1,000 in Alphabet right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in the Alphabet and Vanguard S&P 500 ETFs. The Motley Fool positions and recommends the Alphabet and Vanguard S&P 500 ETFs. The Motley Fool has a disclosure policy.
New Tech Sell-Off Makes Artificial Intelligence (AI) Stocks a Better Buy This is published by The Motley Fool
