Last year was a downright awful one for Alphabet (GOOG -1.86%) (GOOGL -1.84%) stock. Shares of the technology giant tumbled to the tune of 40%, mirroring the lousy performances dished out by most of its tech peers.

As we look back on 2022 though, it becomes clear the proverbial punishment doesn't quite fit the crime. That is to say, while last year certainly presented fresh challenges for Google and YouTube's parent company, the market overreacted. Alphabet is still a growth machine. 

Investors should collectively remember and realize this reality once all the dust kicked up in 2022 starts to settle in 2023. In turn, that could spark a long overdue reversal of last year's sell-off.

The new-and-improved Alphabet

Don't misread the message. Enough of last year's headaches are lingering into 2023. Amazon continues to win web advertising dollars that at one point would have easily been earned by Alphabet's Google, for instance. And CFO Ruth Porat conceded during the company's third-quarter conference call held in October that its so-so quarterly results reflected a "pullback in advertiser spend in some areas." That headwind is still in place.

What's not being reflected in the stock's present price, however, is a series of changes just now being implemented.

One of these changes is new-and-improved artificial intelligence (AI) supporting its search engine. Web searches made using Google should deliver even more relevant results from here, indirectly making Google a more powerful marketing tool for advertisers. These improvements in its search-oriented AI also facilitate upgrades of Google's shopping platform, like suggesting purchases and creating a more visually immersive experience.

YouTube is being upgraded as well. One of the more important improvements unveiled last year is the monetization of "shorts" -- shorter videos that may not have previously been eligible to generate ad revenue. This change, a looming blow to TikTok's deep reach, incentivizes creators to post more of the video content advertisers and consumers increasingly want.

And these initiatives are just a sampling of the core product improvements the company is making. Perhaps the biggest and best overhaul, though, is the one users and advertisers will see the least. That's more focused leadership.

CEO Sundar Pichai stated during October's conference call: "We are sharpening our focus on a clear set of product and business priorities." He's then gone on to prove it. Aside from the changes described above and plans for cost cuts, in November Pichai cautioned employees that as many as 10,000 "poorly performing" workers could be losing their jobs soon. It sounds like he's got a new fire in his belly.

And he should. Pichai's recently negotiated pay package is tethered to a handful of very specific results. Chief among them is Alphabet shareholder returns relative to the performance of the S&P 500. Not that Pichai wasn't always on the same side of the table as Alphabet's investors, but from this point on he's got even more of an incentive to rekindle the stock's long-term bullish progress.

It's still the juggernaut to beat

With all of that being said, don't look past the two bigger-picture, philosophical reasons Alphabet shares are primed to rebound in the year ahead: the continued dominance of its key markets and a misunderstanding of why 2022's fiscal results felt relatively disappointing (the company missed its third-quarter revenue estimates and fell short of Q2's revenue as well as earnings expectations).

As for its dominance, numbers from GlobalStats' statcounter indicate Android's market share of mobile operating systems in use is holding steady at nearly 71%. GlobalStats data also says Google's share of the world's search engine market remains above 92% where it's been for over a decade now even if the value of a "click" has diminished during that time.

YouTube, in the meantime, has continued to expand its viewer base. TV-viewing measurement outfit Nielsen says YouTube -- when including YouTube TV -- was the United States' most-watched streaming platform in September, eclipsing Netflix for the first time ever that month. Fueled by sports content, this lead has widened in the meantime.

And YouTube's piece of the sports broadcast market is about to get a whole lot bigger. Alphabet just inked a major deal with the National Football League to offer the NFL's Sunday Ticket games to YouTube users. The point is, Alphabet remains a juggernaut, and Pichai is starting 2023 out with the same powerful weapons the company's been wielding for years -- and some new ones.

But 2022's seemingly slowing growth?

Take a step back and look at the proverbial bigger picture. These are still unusual times. Many web-based companies struggled in 2022 to hold a candle to 2021's stellar profit growth when most people were still living their lives online. But no one's ever actually seen the world ease its way out of the impact of a pandemic. Maybe last year's expectations were unfair. Maybe Alphabet just handled it all wrong. Maybe it was a little of both. We just don't know.

Alphabet's long-term revenue and profit growth should remain intact at last through 2026.

Data source: Thomson Reuters. Chart by author.

What we do know is, neither possibility matters much anymore. The damage to the stock's been done -- and then some -- as investors dumped shares rather indiscriminately this past year for many of the wrong reasons. Chief among them are fear of the environment and the erroneous assumption that economic headwinds last forever.

Their mistake is your opportunity

That's the crux of your opportunity, by the way. Much of the headwind ailing Alphabet's stock over the course of the past year is now fading. The company is simultaneously tightening up its operation in the meantime.

Even if investors don't collectively see the subsequent recovery coming yet, analysts do. They're calling for top-line growth of 8% and per-share earnings growth of 10%, with more of the same for several more years down the road. They're also maintaining an average "buy" rating and an average target price near $124, which is roughly 40% higher than the stock's present price.

So, connect the dots. Alphabet shares are down, but they won't likely be down this much for much longer.