What Stock from the "Impressive Seven" Portfolio Offers the Best Buying Opportunity Currently?
Alphabet: A Leading Player in Technology and AI
Alphabet Inc., parent company to Google, is making waves in the tech industry with its diverse portfolio of innovations. The company, represented by the ticker symbols GOOGL and GOOG, is considered a top stock pick among the "Magnificent Seven," a group that also includes Apple, Microsoft, Amazon, Meta, Nvidia, and Tesla.
One of Alphabet's key strengths lies in its leadership in quantum computing. The company's Willow chip, designed to exponentially reduce errors as it scales up, puts Alphabet at the forefront of this emerging technology.
In the realm of artificial intelligence (AI), Alphabet is leveraging its custom-built Tensor Processing Units (TPUs). These TPUs, optimized for AI workloads within Google Cloud's TensorFlow framework, are more powerful and energy-efficient than off-the-shelf graphics processing units (GPUs). Alphabet rents out these TPUs through Google Cloud, with OpenAI testing them.
Alphabet is also rolling out commerce-related features such as "Shop by AI," virtual try-ons, and dynamic ticket searches. These innovations are part of a broader strategy to capitalize on the growing AI market.
The inference market, expected to become larger than the AI training market, presents an opportunity for Alphabet. The company recently launched Ironwood, a TPU designed for inference, further solidifying its position in this space.
Google Cloud, Alphabet's cloud computing business, has reached scale and shows strong operating leverage. It holds a strong leadership position in data analytics, with tools like BigQuery and Kubernetes. Google Cloud also benefits from customers using its Vertex AI platform to build, deploy, and manage AI models.
Alphabet's digital advertising platform remains one of the largest and most effective in the world. Despite concerns about AI chatbots, Alphabet's ad-supported search model still dominates. Interestingly, only about 20% of Alphabet's searches today have ads, leaving room for future monetization.
Beyond search engines and cloud computing, Alphabet is active in various innovative sectors. These include artificial intelligence, autonomous vehicles (through Waymo), healthcare technology (Verily), smart home devices (Nest), and other "moonshot" projects under its parent company, Alphabet Inc.
Waymo, Alphabet's robotaxi subsidiary, is seeing usage skyrocket and expanding into new cities. In Austin, Waymo vehicles were more active than 99% of Uber's human drivers. Waymo has also partnered with Uber for fleet services and distribution.
Alphabet owns the distribution of the Android smartphone operating system and Chrome browser. It has revenue-sharing agreements with Apple, Opera, and other third-party browsers.
With a forward price-to-earnings (P/E) ratio of just over 18 times 2025 analyst estimates, Alphabet is the cheapest AI play among the "Magnificent Seven." This makes it an attractive long-term pick for investors looking for a technology leader at a relatively affordable price.
