Key Morningstar Metrics for Alphabet
- Fair Value Estimate: $237.00
- Morningstar Rating: ★★★★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: Medium
Alphabet Stock Update
After weakness following the company’s fourth-quarter earnings, Alphabet’s GOOG stock continues to face downward pressure as the markets reel from a spectacular rout catalyzed by the imposition of tariffs by the new US administration.
Why it matters: While there remains uncertainty on how long the tariffs will last, we think Alphabet is competitively well-positioned even if digital advertising spending slows down.
• During periods of economic uncertainty, we see a disproportionate impact on top-funnel (brand awareness) advertising budgets. Alphabet, with its high-return-on-ad-spending search business, should be more resilient than its top-funnel digital advertising peers.
• Further, while tariffs continue to bring a lot of attention to Alphabet’s digital advertising business, we believe investors should pay attention to the firm’s cloud business which stands to accelerate sales in 2025 as capacity constraints ease, with more data center capacity coming online.
The bottom line: We maintain our $237 fair value estimate for wide-moat Alphabet and continue to view the firm as materially undervalued.
• If the US tariffs persist, and we see a broad digital advertising spending slowdown, we’d expect a 10% fair value estimate decrease for Alphabet’s shares, still valuing the firm well ahead of its current price.
Coming up: Alphabet’s launch of Gemini 2.5, its leading-edge LLM, has catalyzed significant developer interest, and we expect the firm to monetize this interest in its cloud sales over 2025.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.