Alphabet is the best performing Mag7 stock in 2025. Its rally is not over, Barron's believes

Shares of Alphabet, Google's holding company, are up nearly 60% in 2025, but analysts believe the company's potential is not yet exhausted, Barron's writes. Despite the high valuation, Google's business continues to grow revenue and show strong results, especially on the cloud side. And the launch of the Gemini 3 AI model confirmed that Google remains one of the leaders in the artificial intelligence race.

Investors who own Alphabet shares shouldn't sell them just yet, despite their impressive growth this year: they're in for a continued rally, Barron's wrote . He recommended holding positions in Alphabet.

Although investors often get nervous after a sharp rise in share prices and seek to lock in profits, they should not lose their way now, Barron's believes. It is unlikely to expect a repeat of the jump of almost 80% over the past 12 months, but "good old-fashioned quality business" should support the stock's upward movement, the publication believes.

"The stock has gone from $160 to over $300 and looks less attractive," notes Oakmark fund manager Bill Nygren. - However, Alphabet is still not selling for more than what we think it is really worth."

Even after the growth of 70% Alphabet still cannot be called an expensive company compared to other technology giants, notes Barron's. According to the ratio of the value of securities to projected earnings (P/E ratio), it ranks second in terms of "affordability" among the "Magnificent Seven" - only Meta is cheaper with a ratio of 20.

A comparison of the two companies shows the difference well, the publication emphasizes . Both Alphabet and Meta earn a lot and actively invest in artificial intelligence. But their results are different: Meta's profitability is declining - its costs have more than doubled and its margin has fallen. Alphabet is the opposite: the company is becoming more and more efficient. In the third quarter, pre-tax profit rose 39% and margins improved. Expenses also increased, but they are growing along with profits, Barron's points out .

For the stock to continue to grow, Alphabet needs to continue to show similarly strong results, Barron's emphasizes . According to analysts' forecasts, in 2025 the company's earnings will exceed $10 per share, and in 2026 - to keep the momentum - it should rise to $12-13 per share (the current consensus is about $11). Such a scenario looks quite realistic, Barron's believes. The catalyst for the stock, in particular, could be Google's cloud business, says analyst Dan Salmon of New Street Research. Wall Street estimates that Google Cloud revenue in 2026 could reach $75 billion, compared to about $57 billion expected in 2025, Barron's added.

These expectations are based on a steady demand for AI - and there are no signs of slowing down yet. Google's presentation of the Gemini 3 model on November 18 showed that the company is not just keeping up in this race, but is gradually moving into the lead. It is difficult to predict which AI application will eventually become the absolute winner, but Alphabet has proven many times that it can turn technology into profit - and the launch of Gemini 3 only confirms this, says Bill Nygren.

"The first reviews are pure 'wow'," notes the expert. - And this is not surprising: the company would have to manage to disastrously mismanage its capital in order not to be at least among the leaders".

Evercore analyst Mark Mahaney points out that Alphabet is leveraging AI by creating products that open up new revenue streams in almost all business segments. The stock can no longer be called "clearly undervalued," but it still looks attractive.

"Google no longer falls into the classic DHQ (Dislocated High Quality) category of undervalued quality companies," Mahaney says. - But the fundamentals and pace of innovation here are really impressive." The analyst set a $325 target price on the stock: that implies a 9% upside from current levels.

Barron's summarizes that if to reduce the share of Alphabet in the portfolio, then moderately. Wall Street strategists believe that Alphabet has a good growth potential, and the market supports it. According to MarketWatch, the majority of analysts (63 out of 74), suggest buying the stock, ten recommend holding and only one thinks it should be sold.

This article was AI-translated and verified by a human editor