Alphabet (GOOG 1.68%) (GOOGL 1.66%) was the top-performing "Magnificent Seven" stock of 2025, and also outpaced many other big tech stocks. It had multiple catalysts driving it higher, but some of those won't be applicable in 2026.
What will its stock price be by the end of 2026? Well, I don't think that Alphabet can pull off another 65% run like it did in 2025, but I do think that the stock will beat the market.
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Lingering issues were resolved
Alphabet had a few problems as 2025 began. Many investors were convinced that it was too far behind in the generative AI race and wouldn't be able to catch up to the upstarts that had snagged market share in the early days. However, it proved that premise wrong throughout the year. Gemini emerged as a top large language model and has challenged the leaders in many of the tests used to determine how accurate and useful these models are. Alphabet enters 2026 as one of the leaders in the generative AI realm, and this could boost the company throughout the year as more and more clients choose to build their artificial intelligence features utilizing Gemini. We're still probably a few years out from seeing this investment pay off, but I think it will be a long-term positive.
NASDAQ: GOOGL
Key Data Points
Another area investors were worried about was the status of Google Search, Alphabet's primary cash cow. In Q3, Google Search was responsible for $56.6 billion of the company's $102.3 billion in total revenues.
At the start of 2025, Google Search was facing two threats: generative AI, and the possibility that the company would have to divest itself of key units such as the Chrome browser and the Android operating system after a federal judge ruled that Alphabet had been violating antitrust laws and behaving as a monopoly. The search business benefits heavily from its integration with Chrome and Android.
The first concern was based on the assumption that generative AI tools would reduce the amount of traffic to Google Search pages as people used options like ChatGPT to answer their questions instead, but that hasn't happened. Instead, the company integrated AI Overviews into its search responses. Those AI-generated summaries have proven popular, and helped Google maintain its dominance in search.
Additionally, Alphabet received positive news from the court: The judge chose to impose lighter penalties on it for its anticompetitiveness violations. No breakup of the company was required. While it had to make some concessions, they were relatively minor, and considering the range of outcomes the company could have faced, matters couldn't have worked out any better.
All of these items contributed to the stock being undervalued early in 2025. However, as they were resolved, its valuation rose back to parity with its big tech peers. As a result, the biggest catalyst from 2025 is no longer applicable in 2026.
GOOG PE Ratio (Forward) data by YCharts.
Now, it trades for 30 times forward earnings, which I'd say is a very reasonable price tag in today's environment for big tech. From here, we can expect its stock price moves to be somewhat correlated to its earnings growth.
With that in mind, what might Alphabet's stock price be at the end of 2026?
2026 won't be a repeat of 2025
Alphabet's revenue is expected to increase by about 14% in 2026. That rate is around the bar that all big tech companies have to clear to be attractive investments.
If we assume that it will still trade for 30 times forward earnings at the end of 2026, we'll need to utilize 2027 projections. For 2027, the average estimate among 10 Wall Street analysts covering the stock is that it will generate $12.76 in earnings per share. At 30 times forward earnings, that would give it a share price of about $383 -- about 14% above today's level.
Because that's above the market's average annual return of about 10%, I think Alphabet is an excellent stock to buy now, but if the market rises by more than 10% (as it did in 2025), Alphabet could still underperform despite what most would consider a successful year.
