Shares of Alphabet (NASDAQ: GOOGL), parent company of Google, are at a crossroads and an inflection point.
After falling nearly 20% from their 52-week high, the stock has since rebounded, climbing roughly 20% from its 52-week low—a move that traditionally signals the entry into a new bull market.
However, as GOOGL trades between major technical levels and the midpoint of its 52-week range, sentiment remains split, as do price action and stock positioning.
So the real question becomes: who will be right, the bears or the bulls?
As investors weigh the tech giant’s future, here’s a look at its bull and bear cases.
The Bull Case for Alphabet
Despite increasing pressure from AI search and advertising challengers, Alphabet is hardly conceding its dominance. The company is aggressively positioning itself for the next phase of the tech revolution. At its Google I/O 2025 developer conference, Alphabet showcased a suite of AI innovations, particularly through its Gemini AI models, demonstrating its ambition to remain a leader in next-generation computing. JPMorgan reiterated its Overweight rating on GOOGL following the event, with a $195 price target, citing its AI advancements and growing monetization potential.
[content-module:Forecast|NASDAQ: GOOGL]Google Search remains the king of online search, still commanding roughly 88% of the U.S. market share. While AI-powered tools have emerged as alternatives, Google’s scale, infrastructure, and integration across devices keep it deeply embedded in everyday internet use.
Its integration of AI into core products is already bearing fruit. "AI Overviews" now reaches over 1.5 billion users across 140 countries and is being monetized in a comparable manner to traditional search results, according to management.
This suggests that Google isn’t just adopting AI, it’s monetizing it efficiently at scale.
Beyond search, Alphabet’s diversified revenue streams are gaining momentum. YouTube reported $10.47 billion in ad revenue for the last quarter, driven by growth in subscriptions and robust user engagement. Google Cloud, once a laggard, has gained traction, with enterprises increasingly adopting its AI-powered solutions.
And Waymo, Alphabet’s autonomous driving arm, is expanding to over 10 U.S. cities, offering promising optionality over the long term.
Importantly, Alphabet's valuation looks attractive. The stock historically trades at an average P/E of around 28. Today, it trades at just 16.3x forward earnings and 18.5x trailing earnings, valuations more typical of slow-growth value stocks than tech giants with scalable platforms. For long-term investors, this could signal an opportunity to buy a dominant business at a significant discount.
The Bear Case for Alphabet
Still, not all signs point to a bullish future. The core of the bear case is simple: Alphabet’s primary engine, search and advertising, is under threat, and growth may not justify even today’s seemingly cheap valuation.
One of the most significant risks is the potential erosion of Google’s search dominance, particularly in the face of new competition. Recent reports suggest that Apple is considering switching its default search engine in Safari and Siri to an AI-powered alternative, such as Perplexity or OpenAI’s ChatGPT.
During Alphabet’s antitrust trial, Apple’s Eddy Cue noted a significant decline in Safari search volume as users increasingly rely on AI-based tools. If Apple ultimately severs or shifts its lucrative search partnership with Google, it could significantly blow Alphabet’s ad revenue.
Add to that rising competition from Amazon’s and Meta’s ad ecosystems and the rise of AI-native platforms that don’t rely on traditional search structures. Google is competing not just for ad dollars but to remain relevant in how people access information.
Regulatory risks are another significant headwind. Ongoing antitrust litigation in the U.S. and EU targets Google’s dominance in ad tech and search. Meanwhile, privacy laws continue to limit the scope of data collection, reducing the precision and profitability of targeted advertising.
Lastly, bears argue that despite Alphabet’s numerous initiatives, its innovation has yet to accelerate earnings growth materially. If its AI initiatives fail to offset the decline in search dominance, investors in GOOGL could potentially find themselves in a classic value trap.
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