Alphabet (GOOGL), Google’s parent company, continues to show strong momentum across its core businesses, driven primarily by its rapid advances in artificial intelligence (AI). Despite the company delivering solid growth and gaining share in the AI space, GOOGL stock continues to trade at a noticeable discount compared to other tech giants.

At current levels, Alphabet trades at 21.2 times its forward earnings and 7.3 times sales. In contrast, Microsoft (MSFT) commands a forward price-earnings multiple of 33x, Apple (AAPL) trades at 31.6x, and Amazon (AMZN) at 34x. Despite the lower valuation, Alphabet delivers growth that’s broadly in line with its peers or even better.

One of the key factors holding Alphabet back has been regulatory scrutiny. The Department of Justice had pursued a lawsuit since 2020, alleging that Google monopolized online search and advertising, with regulators even pushing for the company to divest its Chrome browser. This cloud of uncertainty has loomed large over the stock, keeping a lid on investor enthusiasm.

That overhang just got lighter. A U.S. District Court on Tuesday issued its decision on remedies for Google’s search practices, and the outcome is broadly favorable. Google will not sell Chrome and will not be blocked from striking agreements with distribution partners to ensure its products remain widely accessible. The judgment preserves Google’s ability to maintain its search dominance through Traffic Acquisition Cost payments to partners, an essential piece of its business model.

With that risk effectively cleared, Alphabet stock can close the valuation gap with peers. The fundamentals remain strong, AI continues to drive growth, and the legal threat that weighed on shares has eased.

AI Momentum and Easing Regulations Support GOOGL Stock

Alphabet’s future is looking brighter than ever. With regulatory pressures beginning to ease and Alphabet’s big bets on AI technology starting to pay off, the tech giant is poised to deliver solid growth.

By embedding AI across its products, platforms, and services, Alphabet is transforming the way people use its offerings and creating new monetization opportunities and efficiencies that could drive its share price higher.

Google Search has emerged as one of the biggest winners from the company’s AI push. The technology is redefining how users find information. This has resulted in increased search activity and higher engagement. AI Overviews now reach more than 2 billion users worldwide. At the same time, the Gemini app, Alphabet’s AI assistant, has quickly gained popularity, drawing over 450 million monthly active users and seeing daily requests grow by more than 50% compared to the prior quarter.

That engagement is showing up in the numbers. In the second quarter, Google Search and related businesses generated $54.2 billion in revenue, representing a 12% year-over-year increase. This growth was broad-based, spanning multiple industries and demonstrating the strength of Alphabet’s business model.

The momentum is also spilling into Google Cloud, which is seeing a surge in demand for AI-driven solutions. Cloud revenues climbed 32% in the second quarter to $13.6 billion, powered by the Google Cloud Platform’s (GCP) expanding AI tools and enterprise adoption. Contracts worth over $250 million more than doubled from last year, and Alphabet has already matched the number of billion-dollar-plus Cloud deals it signed in all of 2024, just halfway through 2025. Customer growth in the Cloud business jumped nearly 28% quarter over quarter, pushing its annual run rate past $50 billion.

To keep pace with this demand, Alphabet has raised its capital spending forecast to $85 billion for 2025, up from $75 billion previously. Much of this will go toward new servers and data centers, ensuring the company can meet the growing needs of cloud and AI workloads.

Meanwhile, YouTube continues to thrive as both an advertising powerhouse and a subscription platform. Ad revenues reached $9.8 billion in the second quarter, up 13% year-over-year, with Shorts gaining traction and subscription services like YouTube Premium expanding globally. By strengthening its premium offerings, Alphabet is diversifying its revenue streams and cementing its position in digital entertainment.

Why GOOGL Stock Is a Strong Buy Right Now

With AI driving deeper user engagement, Google Cloud scaling rapidly, and YouTube continuing to expand its monetization base, Alphabet is well-positioned to deliver solid long-term growth. Moreover, with easing regulatory risks and shares trading at a discount to peers, the case for owning GOOGL stock has rarely looked stronger.

Analysts are also upbeat about GOOGL stock and maintain a “Strong Buy” consensus rating.