Is Alphabet the Most Overlooked AI Stock Right Now?
Alphabet may be nearing the end of a sluggish year, with analysts at Jefferies arguing the tech giant is undervalued and well-positioned in the AI race.
Despite a 9% drop year-to-date and lagging behind peers like Nvidia, the firm maintained its Buy rating and $210 price target on Alphabet stock — suggesting more than 20% upside from current levels.
Jefferies’ Brent Thill outlined five core reasons behind the bullish stance:
- Search Resilience: Google Search continues to dominate with a 90% market share, showing little impact from AI competitors like ChatGPT. Its AI Overviews now reach 1.5 billion monthly users.
- YouTube Growth: YouTube generates roughly 30% more revenue than Netflix but trades at a discount. Jefferies views it as a key growth catalyst in a video-driven internet economy.
- Gemini’s Quiet Strength: Alphabet’s Gemini LLM processes 480 trillion tokens monthly — a 50x jump in a year. Integration across Google’s ecosystem boosts both scale and utility.
- Cloud Opportunity: Google Cloud still trails AWS and Azure, but Jefferies sees upside in Alphabet’s AI infrastructure leadership and growing public sector contracts.
- Improving Margins: Despite major AI investments, Alphabet’s operating margin hit a record 40% in Q1 2025. The firm sees continued efficiency gains and buyback potential, backed by $84 billion in net cash.
Valuation remains a central part of the bull case. Alphabet trades at just 11x forward EV/EBITDA, below its 10-year average and far from recent highs. Jefferies says this disconnect — especially given growth in AI, cloud, and video — makes for an appealing long-term entry point.
With earnings due in late July, Alphabet’s report could reset investor sentiment. For now, Jefferies believes the stock is being overlooked amid broader market rotation and short-term AI fatigue.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
