After falling 39% in 2022, shares of Alphabet (GOOGL 1.20%) (GOOG 1.25%) have been on a tear this year, up 46% (as of July 26). That performance leads the 35% gain of Nasdaq Composite index by a sizable margin. 

The tech giant's recently reported second-quarter financials definitely helped propel the stock price even higher. In fact, revenue growth for Alphabet is showing signs of accelerating, something shareholders are getting excited about after a notable slowdown last year. However, the stock is still 14% off its all-time high price. 

Is now the time for investors to buy this FAANG stock? Let's take a closer look at Alphabet. 

Momentum is picking up 

Alphabet's Q2 financials beat Wall Street expectations. Revenue increased 7% year over year to total $74.6 billion. This marks the second straight quarter that growth has accelerated. In the fourth quarter of 2022, sales were only up 1% year over year, a sign that macro headwinds were negatively impacting Alphabet's bread and butter of digital advertising. 

But the market for digital ads looks to be recovering, as the company's ad revenue rose 3%. Google Search, which represented 73% of Alphabet's total ad revenue in the quarter, saw sales growth of 5%. The fear that ChatGPT's rapid rise, and its integration with Microsoft's Bing, would derail Google Search has clearly been overblown. With almost 93% share of the market, Google Search is still dominating without a shadow of a doubt. 

After posting a revenue decline in Q1, YouTube returned to growth in the latest quarter, with revenue increasing 4% to $7.7 billion. 

And diluted earnings per share, the other key headline figure investors focus on, totaled $1.44, up 19% from Q2 2022. Like its tech peers, Alphabet instituted cost cuts, which included laying off 12,000 employees. The company is starting to feel the effects of a leaner and more efficient organization, as evidenced by the operating margin expanding to 29%. 

Google Cloud Platform 

It's not surprising that digital advertising receives a lot of the attention as it relates to Alphabet's financial results. But the company's cloud computing service, Google Cloud Platform (GCP), is really hitting its stride. GCP revenue jumped 28% year over year to $8 billion. And the segment generated $395 million in operating income, the second straight quarter that this happened. 

With the global market for cloud infrastructure services projected to reach nearly $1.6 trillion by 2030, GCP is staring at a massive opportunity. With the engineering talent and financial resources that Alphabet can provide, I don't think it's a question whether GCP is poised to become a major driver of financial results for the overall company. 

The valuation matters 

Despite still being off their peak price, shares have performed well over the past five years, rising 102%. But after the stock price has run up significantly in 2023, investors might be shying away from adding Alphabet to their portfolios because of fears that it might be too late. 

I think this is the wrong perspective to have. Right now, shares are trading at a price-to-earnings ratio of 28.8, below the 10-year historical average of 30.6. That seems like a good deal for such a dominant business like Alphabet. 

In my opinion, this is a company that can become a foundational holding in an investor's portfolio for the next decade. Alphabet has the balance sheet to successfully navigate any challenges that come its way. As of June 30, the balance sheet consisted of $118 billion of cash, cash equivalents, and marketable securities compared to $14 billion of long-term debt. That can give investors peace of mind. 

Moreover, Alphabet is in a prime position to be a leader in terms of technological innovations, just like it has always been. And this includes artificial intelligence. I don't have any doubts that the company will continue to be at the forefront of the ongoing rise of the internet revolution. 

And that's why I believe this is a no-brainer stock to buy.