To The Moon

$Alphabet(GOOG)$ The U.S. federal court has handed Alphabet a major win, rejecting the Department of Justice’s push to force the divestiture of Chrome and Android. This ruling shields two of Alphabet’s powerhouse businesses from a potential breakup, sparking a 7% after-hours stock surge to $230. With legal clouds clearing, the focus shifts to Alphabet’s AI and cloud ambitions, its long-term investment potential, and whether it stands as the most undervalued gem among the Magnificent 7. Dive into the details, explore the implications, and decide if this is your next big pick.

The Victory’s Ripple Effect: Room to Grow?

This court decision could unlock significant growth avenues for Alphabet:

• AI Expansion: Freed from structural risks, Alphabet can double down on AI innovations like Gemini and VEO-3, enhancing Search and YouTube with personalized AI features. The ruling allows uninterrupted investment in proprietary TPUs and a vertically integrated AI stack, potentially boosting market share beyond its current 90% search dominance.

• Cloud Momentum: Google Cloud, already up 28% YoY to $12.3 billion in Q1 2025, benefits from this stability. Without Chrome or Android divestiture threats, Alphabet can aggressively expand cloud infrastructure, targeting Amazon and Microsoft’s $100 billion+ cloud markets with AI-driven solutions.

• Strategic Flexibility: The victory preserves Alphabet’s ecosystem—Search, Android, Chrome, and YouTube—enabling seamless cross-product AI integration. This could accelerate Waymo’s autonomous ride volume (10 million paid rides by mid-2025) and DeepMind’s research, positioning Alphabet as an AI leader.

• Market Sentiment: Posts found on X reflect optimism, with some calling it a “game-changer for AI dominance,” though others warn of lingering regulatory scrutiny. This mixed buzz suggests a pivotal moment for strategic bets.

With $100 billion in cash reserves, Alphabet now has the financial muscle to outpace competitors in these high-growth areas.

Long-Term Holding: Is Google Your Champion?

Alphabet’s fundamentals make a compelling case for a long-term hold:

• Revenue Resilience: Q2 2025 revenue hit $96.43 billion, up 14% YoY, with Search up 14%, YouTube ads up 13% to $9.8 billion, and Cloud up 29%. This diversification reduces reliance on ads (now 74% of revenue, down from 77%).

• Profitability: Normalized EPS rose 22% to $2.31, with operating margins near all-time highs, supported by $73 billion in free cash flow in 2024.

• Growth Catalysts: Waymo’s $45 billion valuation and 200 million driven miles offer asymmetric upside, while YouTube’s 270 million subscribers generate a $17 billion run-rate. Cloud’s profitability and AI Overviews’ engagement boost signal sustained growth.

• Valuation Appeal: At a forward P/E of 17.52x and P/S of 5.78x, Alphabet trades below Microsoft (35.80x), Apple (28.26x), and Amazon (34x), suggesting undervaluation despite robust fundamentals.

• Risks to Weigh: Antitrust overhang persists, with ad-tech lawsuits and EU fines looming. AI competition from OpenAI and regulatory shifts could pressure margins, but the Chrome/Android win mitigates immediate threats.

For long-term investors, Alphabet’s moat and cash flow make it a strong contender, especially if AI and cloud gains accelerate.

Undervalued Among the Magnificent 7?

Alphabet may indeed be the cheapest Mag 7 stock:

• P/E Comparison: Alphabet’s 17.52x forward P/E contrasts with Microsoft’s 35.80x, Apple’s 28.26x, Amazon’s 34x, Nvidia’s 40x+, Meta’s 25x, and Tesla’s 60x+, indicating a discount relative to growth.

• P/S Ratio: At 5.78x, Alphabet undercuts Microsoft (12x), Apple (7x), and Amazon (3.5x adjusted), reflecting market caution despite $2.58 trillion market cap.

• Earnings Growth: Analysts project 18% earnings growth for 2025, outpacing the S&P 500’s 11%, yet its stock lags the Mag 7 average 24% YTD gain with only 5% (per August data).

• Peer Context: Nvidia’s AI hype and Tesla’s EV bets inflate valuations, while Alphabet’s steady 14% revenue growth and $138.86 billion EBITDA (36.45% margin) go underappreciated. Analysts see a $315 target by 2030, a 37% upside from $230.

• Critical View: The market may undervalue Alphabet due to antitrust noise, but the Chrome/Android ruling suggests resilience. Still, a potential EU ad-tech fine or AI disruption could cap gains unless cloud and Waymo deliver.

Among Mag 7, Alphabet’s metrics and recent legal win position it as the undervalued outlier.

Trading Strategies: Capitalize on the Surge

Seize the momentum with these plays:

• Long Position: Buy GOOGL at $230, target $250 (9% gain), stop at $220. Hold for AI/cloud upside.

• Options Play: Buy $240 calls (September expiry) for 50-100% gains if it hits $250-$260 on volume.

• Swing Trade: Buy at $230, target $245, stop at $225. Exit if regulatory news emerges.

• Hedged Approach: Pair with VIXY at $14, targeting $16, to mitigate a 5% dip risk.

Monitor Q3 earnings (October 28, 2025) and EU rulings for catalysts.

Investment Plan: Building the Future

I’m leaning into Alphabet’s potential with a balanced strategy. I’ll buy 100 shares at $230, targeting $250, with a $220 stop, banking on AI and cloud growth. I’ll add 50 $240 calls for leverage, aiming for $5-$10 gains per contract. I’ll hold 30% cash for a dip to $210 if tariffs or fines hit, and hedge with 20 VIXY shares at $14, targeting $16. I’ll track Waymo updates and Cloud revenue closely, adjusting if EU action intensifies.

Key Metrics

The Broader Outlook

On September 3, 2025, Alphabet’s legal victory bolsters its $2.58 trillion valuation, with the S&P 500 at 6,512.34 reflecting broad strength. The 7% after-hours jump signals investor relief, but a VIX at 14.12 hints at calm before potential storms—EU fines or AI competition could test $220 support. Long-term, Alphabet’s AI and cloud bets could drive it to $300+ by 2027 if Waymo scales and Cloud hits $20 billion quarterly. Short-term, watch for $245 resistance. Is Alphabet your undervalued anchor or a risky bet?

Will you hold Alphabet long-term? Drop your thoughts below!

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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