Is Alphabet (GOOGL) Still Undervalued?

Number of Hedge Funds: 265

Top Pick Of: Chase Coleman — Tiger Global Management

Alphabet (NASDAQ:GOOGL) is the biggest holding of billionaire Chase Coleman’s Tiger Global.

What was erstwhile seen arsenic a concern astatine hazard of being disrupted by AI has, instead, turned the tables.

In Q1, Google Search roseate astir 19%, showing that AI is not reducing usage but really expanding engagement crossed queries. YouTube advertizing gross grew 11%, supported by amended AI-driven targeting and improved advertisement relevance. Subscription products besides continued to scale, benefiting from deeper integration of AI crossed Google’s ecosystem.

Google Cloud remains the biggest catalyst successful the story. Revenue roseate 63% successful Q1, portion operating margins expanded sharply arsenic the concern moved further into high-value endeavor workloads. The Cloud backlog came successful astatine astir $460 billion, giving beardown visibility into aboriginal revenue. Alphabet (NASDAQ:GOOGL) customized TPU chips are besides becoming a cardinal advantage, supporting some outgo ratio and AI compute demand.

Gemini has reached astir 750 cardinal monthly progressive users successful its standalone app, portion its models powerfulness implicit 2 cardinal monthly users done Google Search AI Overviews and AI Mode. Paid adoption is besides scaling, with much than 8 cardinal endeavor seats crossed thousands of companies.

From a valuation perspective, the banal trades astatine astir a mid-to-high 20s guardant P/E (~26–28x). Earnings are expected to turn astir high-20% to low-30% annually, driven by Search resilience, Cloud acceleration, and AI monetization crossed products.

L1 Capital International Fund stated the pursuing regarding Alphabet Inc. (NASDAQ:GOOGL) successful its Q1 2026 capitalist letter:

Portfolio adjustments during the March 2026 4th were comparatively modest, but deliberate. We trimmed investments successful AerCap, Alphabet Inc. (NASDAQ:GOOGL), HCA Healthcare and Weir Group astatine prices astir the apical extremity of our assessed just worth range, with each of these businesses benefitting from affirmative sentiment intra-quarter. Alphabet’s stock terms has much than doubled implicit the past 12 months. This reflects beardown show successful halfway Search, continued momentum successful Google Cloud Platform, and better-than-expected advancement successful AI (Gemini). Today Alphabet has a marketplace capitalisation approaching US$4 trillion. Share prices and just worth are not ever aligned, adjacent for the world’s largest companies (Click Here to Read the Letter successful Detail).