Despite mounting challenges in 2025, Wall Street and institutional investors continue to express strong confidence in Alphabet (NASDAQ: GOOGL).
While the stock has faced significant pressure this year, Alphabet is at a technical and fundamental turning point.
After bouncing off support around $150, shares look to have confirmed a short-term bottom and are now pushing to reclaim the 200-day moving average near $170.
With the stock trading at one of its most attractive valuations in recent memory, the question is: Should investors follow the smart money and take advantage of the recent weakness?
GOOGL Stock Under Pressure, But Showing Signs of Life
Alphabet stock has had a tough go in 2025, dragged lower by broader market weakness, rising competition in AI search, and regulatory headwinds. The stock is down nearly 13% year-to-date, though it has rebounded over 9% in the past week, trimming earlier losses.
A key blow came on May 7, when Apple’s SVP of services, Eddy Cue, confirmed that the company is exploring AI-powered alternatives to Google Search in its Safari browser. That’s no small matter for Alphabet, which pays Apple an estimated $20 billion annually to remain the default search engine, a relationship that supports roughly 36% of Google’s mobile search ad revenue.
Adding to the uncertainty, Alphabet faces rising pressure from AI-based competitors like OpenAI’s ChatGPT and Elon Musk’s Grok, which are starting to encroach on traditional search. However, the company has been proactive in adapting to the changing landscape.
Alphabet’s Gemini, its flagship large language model, has become central to its AI strategy. According to management's recent earnings call, AI Overviews, its integration of generative AI into Google Search, now reaches over 1.5 billion users across 140 countries and is monetized comparably to traditional results.
Meanwhile, the company's other revenue streams continue to show strength. YouTube ad revenue surged to $10.47 billion last quarter, driven by growing subscriptions and user engagement. Once a laggard compared to peers like Amazon AWS, Google Cloud is gaining traction with enterprise adoption of its AI-powered solutions.
Even Waymo, Alphabet’s autonomous driving unit, is expanding operations across more than 10 U.S. cities, pointing to long-term optionality beyond search and ads.
Analysts See Value in Alphabet’s Valuation
[content-module:Forecast|NASDAQ: GOOGL]While macro and competitive pressures have weighed on the stock, Alphabet’s fundamentals remain strong, and analysts are paying attention.
One of the most compelling aspects of GOOGL at current levels is its valuation.
Historically, the stock has traded at an average P/E of 28 over the past decade. Today, its forward P/E is just 16.25, and its trailing P/E sits at 18.4, levels typically reserved for more mature, slower-growth companies.
This discount is drawing analyst interest. According to data from 40 analysts covering the stock, the average price target for GOOGL is $199.75, representing 21% upside from current levels.
The stock also holds a consensus rating of Moderate Buy, with 30 analysts issuing outright Buy recommendations, reflecting continued bullishness from Wall Street despite recent turbulence.
Institutions Are Still Accumulating GOOGL
Perhaps even more telling than analyst sentiment is the behavior of institutional investors. Despite the stock’s drawdown and underperformance compared to some of its Magnificent Seven peers, institutions have not been dumping Alphabet shares. They’ve been buying.
Over the past twelve months, GOOGL has seen $96.4 billion in institutional inflows, compared to $55 billion in outflows, resulting in a substantial net inflow. In Q4 of 2024 alone, Alphabet recorded $55 billion in new institutional investment. In Q1 of 2025, inflows of $16 billion exceeded the $11 billion in outflows.
Among the more notable moves was Baupost Group, managed by legendary investor Seth Klarman, increasing its stake in Alphabet by 45.72% in Q1 2025. The tech giant is now one of Baupost’s top positions, making up 9.33% of the fund’s total portfolio, a clear signal of high conviction.
GOOGL’s Value Case Is Becoming Harder to Ignore
Despite near-term volatility and headline risks, Alphabet’s underlying business remains robust. Its continued dominance in search, expanding cloud and YouTube operations, and aggressive push into AI give it multiple long-term growth drivers.
At today’s valuation, analysts and institutions appear to see Alphabet not as a fading tech giant but as a rare opportunity.
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