Google Stock: A Compelling Buy Under $160
Alphabet logo displayed on a laptop screen and Google website displayed on a phone screen are seen ... More in this illustration photo taken in Krakow, Poland on March 12, 2025. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Question: Why pay 34x earnings for Amazon stock when you can buy Google stock for just 19x? That's a tough sell—especially when you consider three straightforward reasons:
However, if you seek upside with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.
While Google may not fit the mold of a traditional 'safe haven,' its track record during market disruptions is worth considering. The stock declined 45% during the 2022 inflation shock and 31% amid the Covid-19 downturn, showing that it is still prone to volatility.
However, the stock has already seen a significant correction, dropping from over $205 to under $160 now. This decline implies that much of the downside could already be factored in.
With widespread belief that Artificial Intelligence represents a transformative, long-term growth theme, Google may offer a compelling case at its current valuation. Although both Amazon and Google provide AI infrastructure, Google's real strength lies in its groundbreaking AI research and the seamless integration of that technology into products like Search and YouTube. This unique combination of innovation and massive reach positions Google favorably for continued AI-led growth.
Naturally, investing in Google isn't risk-free. There's always a chance earnings might miss estimates or that growth could decelerate. Additionally, unpredictable events could adversely affect the stock. Investors should be prepared for potential volatility—including the possibility of a 30% decline from current levels. That said, for long-term investors with a 3-to-5-year horizon and a 'buy-and-hold' strategy, Google's current valuation might present a worthwhile entry point.
For those with lower risk tolerance, a hedged approach within a diversified portfolio, such as the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark, might offer a smoother ride while still capturing potential upside. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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