Alphabet Inc. (NASDAQ:GOOG)(NASDAQ:GOOGL), the parent company of Google, has been facing some challenges over the last few years, especially as it navigates the complex world of artificial intelligence (AI). With AI rapidly growing in importance and competition intensifying, is GOOG stock a good buy now as the company ramps up its AI efforts? Let’s dive into Google’s AI strategy and how it could influence the stock’s future.

Why Is GOOG Stock Struggling?

In 2023, the AI boom helped Nvidia (NASDAQ:NVDA) soar to a $3 trillion market cap, but Google has been trying to fight off the perception that it’s losing its edge. Despite Alphabet’s ongoing AI investments, GOOG stock has fallen 8.9% in 2025 so far and is down more than 16% from recent highs. Over the past three years, GOOG has seen just a 34% increase in its stock price, the second-lowest performance among its “Magnificent 7” peers.

Several factors have contributed to Alphabet’s underperformance, including regulatory concerns and increasing competition from newer AI-driven companies like ChatGPT. Google’s traditional search engine business, which once dominated the market, has been under pressure, as more users turn to alternative platforms for AI-driven responses. Additionally, Alphabet’s large-scale investments in AI infrastructure and technology have raised concerns about whether the company can deliver meaningful returns.

Alphabet’s AI Expansion

Despite challenges, Google has made significant strides in AI in recent months. The company has introduced a new set of AI features under its Google One AI Premium subscription, which includes advanced AI reasoning and multimodal capabilities. These upgrades enhance the company’s AI offerings, helping it stay competitive in the AI arms race.

In addition, Google has rolled out “vision match,” an AI-driven feature designed to help users visualize clothing items based on descriptions. This is part of a broader push to integrate AI into shopping experiences, providing users with more personalized, intuitive interactions.

However, Google’s AI Overviews (AIO), which combine search with AI, have sparked concerns, especially from content creators like Chegg (NYSE:CHGG), which has filed a lawsuit claiming that Google is using its content to retain traffic on AIO rather than directing it to original sources. This legal challenge reflects the tension between Google’s evolving AI features and the broader web content ecosystem.

Does Google’s AI Push Make GOOG Stock a Buy?

Given the AI momentum, should investors be considering GOOG stock as a potential buy? At present, Alphabet’s valuation is attractive, trading at approximately 19x its expected earnings over the next 12 months, which is low compared to other tech giants like Nvidia (NASDAQ:NVDA) or Meta Platforms (NASDAQ:META). The stock’s relatively low valuation may present a favorable risk-reward ratio for long-term investors, particularly if Google can capitalize on its growing AI capabilities.

Despite its setbacks, Google continues to innovate in the AI space, improving the quality and accessibility of its tools. These incremental improvements in its AI offerings may allow the company to regain some market share in the AI and cloud computing sectors.

Analyst Sentiment on GOOG Stock

The analyst community is generally optimistic about Alphabet’s future. A consensus “Strong Buy” rating comes from the 51 analysts covering the stock, with a mean target price of $218.47. This represents an upside of about 25% from current prices. However, there’s some risk involved, especially with ongoing regulatory pressures that could impact Alphabet’s core business.

Conclusion: Is GOOG Stock a Buy?

Alphabet’s AI investments are likely to bear fruit over time, but the stock’s performance will depend on how quickly it can scale its AI offerings and maintain its position in the competitive tech landscape. The current valuation makes GOOG stock an attractive option for investors looking for long-term growth in the AI sector, but it’s important to be mindful of the risks posed by regulatory hurdles and market competition.

With analysts predicting significant upside, now may be an opportune time to buy GOOG stock at a discount, especially if the stock continues to experience volatility in the short term. Keep an eye on Google’s ongoing AI initiatives and how they evolve throughout 2025.

Featured Image: Freepik

Please See Disclaimer