Google (GOOGL): Exploring Valuation After 18% Rally and New Cloud Deal

Alphabet (GOOGL) has seen its stock make steady gains over the past month, returning 18% as investors continue to track the company’s core advertising and cloud businesses. The upward trend reflects growing optimism around its financial momentum.

See our latest analysis for Alphabet.

Alphabet's recent surge has been fueled by upbeat sentiment around both its advertising recovery and cloud momentum, with its 30-day share price return climbing almost 18%. Looking at the bigger picture, the stock’s one-year total shareholder return stands at an impressive 57%. Over three and five years, Alphabet has outperformed the market by a wide margin. This reflects both resilient growth and renewed investor confidence.

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But with Alphabet’s strong returns driving the stock to new highs, the question now is whether these gains reflect real underlying value or if the market has already priced in all future growth. This could leave little room for a bargain.

Most Popular Narrative: 7.1% Undervalued

Alphabet last closed at $278.83, while the most widely followed narrative puts its fair value at $300. This gap, according to oscargarcia’s narrative, sets a bullish expectation, especially as recent financial momentum and a major new cloud deal fuel optimism.

“Good news first, Alphabet Inc. (ticker: GOOGL/GOOG) has just struck a big deal with Anthropic. Their cloud division (Google Cloud) will provide Anthropic with ‘tens of billions of dollars’ of computing capability. What it means for Alphabet’s valuation is that this deal helps accelerate cloud revenue growth, improves margin potential (since cloud infrastructure for AI is high-growth and high-margin compared to ad business), and strengthens Alphabet’s competitive positioning in the AI arms race. In short, this is a value-adding event for Alphabet, though with caveats such as execution risk, competition, and regulatory issues.”

Read the complete narrative.

Want to know what’s behind this eye-catching valuation? This narrative hinges on a surge of cloud revenue and a bold margin expansion story. What growth projections and profit assumptions power this rich fair value? The full analysis reveals the details. The numbers might just surprise you.

Result: Fair Value of $300 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, execution challenges with scaling new cloud deals or unexpected moves from competitors could quickly shift investor expectations regarding Alphabet’s long-term growth story.

Story Continues

Find out about the key risks to this Alphabet narrative.

Another View: Valuation Through Multiples

Taking a different approach, analysts often turn to price-to-earnings ratios for context. Alphabet trades at 27.1 times earnings, which is pricier than the US Interactive Media and Services industry average of 17 but cheaper than the peer average of 38.2 and well below its fair ratio of 40.4. This implies that while Alphabet looks expensive next to its sector, there might still be room for upside if market sentiment shifts, or risk if peers fall back. Are multiples telling a different story from the recent bullish narratives?

See what the numbers say about this price — find out in our valuation breakdown.NasdaqGS:GOOGL PE Ratio as at Nov 2025

Build Your Own Alphabet Narrative

If you’re eager to dig into Alphabet’s numbers for yourself or put a fresh spin on the story, it only takes a few minutes to craft your own. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Alphabet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include GOOGL.

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