So far, 2025 has been a wake-up call for Alphabet (NASDAQ:GOOGL) investors. After basking in a 36% gain last year, the tech titan has stumbled out of the gate – its stock is already down 16% in the opening stretch of the year.
The broader market environment hasn’t done GOOGL any favors. Jittery sentiment, stoked by a relentless stream of tariff headlines and geopolitical twists, has investors on edge – with each new announcement seemingly sparking bull and bear runs on a weekly basis.
Alphabet is also being buffeted by the fears that it has overreached on its spending, both regarding its AI capex and the recent $32 billion acquisition of the cybersecurity firm, Wiz.
Still, Alphabet is one of the Silicon Valley stalwarts, and a member of the selective Magnificent 7 stars. Could this dip be an opportunity to buy shares at a relatively inexpensive valuation?
For investor A.J. Button, the cheaper share price is still not enough to justify buying GOOGL amidst the current environment.
“Investors ought to demand a discount to Google’s recent valuation. The level of uncertainty in this market is off the charts, and you can’t rule out the possibility that another round of tariffs will make Google’s AI CAPEX even more costly,” asserts the investor.
Button explains that it is “undeniable” that Alphabet has plenty of advantages, ranging from its healthy finances to its one-of-a-kind brand to its proficient management team. And yet, the uncertainty sloshing around the marketplace is simply too much for the investor.
For instance, Button cites the looming Trump threat to place 100% tariffs on TSMC semiconductors, as well as the countrywide border taxes on goods manufactured in Vietnam and China. These actions would have significant repercussions on Google, notes the investor.
“In an environment where relevant variables can’t be predicted, investors ought to demand a cheaper price,” adds Button.
Button is eyeing a buy point around $130 – and until then, he’s staying on the sidelines.
“I’d err on the side of caution and pay $130,” concludes Button, who gives GOOGL a Hold (i.e. Neutral) rating. (To watch Button’s track record, click here)
Wall Street, on the other hand, has not seen its enthusiasm for GOOGL’s prospects diminish. With 13 Buy and 2 Hold recommendations, the stock enjoys a Strong Buy consensus rating. Its 12-month average price target of $207 implies an upside approaching 28% in the year ahead. (See GOOGL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.