Alphabet(NASDAQ:GOOG)(NASDAQ:GOOGL) was the best-performing “Magnificent Seven” stock in 2025 and also outperformed many other big tech stocks. It had multiple catalysts driving it higher, but some of them won’t be applicable in 2026.
What will its share price be at the end of 2026? Well, I don’t think Alphabet can achieve another 65% rally like it did in 2025, but I do think the stock will outperform the market.
Image source: Getty Images.
Alphabet ran into some trouble 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 with startups that had lost market share in the early days. However, that premise proved wrong throughout the year. Gemini emerged as one of the leading language models 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 space, and this could propel the company forward throughout the year as more and more customers choose to build their AI capabilities using Gemini. This investment is probably still a few years away from paying off, but I think it will be a long-term positive.
Another area of concern for investors was the state of Google Search, Alphabet’s main source of revenue. In the third quarter, Google Search was responsible for $56.6 billion of the company’s $102.3 billion in total revenue.
In early 2025, Google Search was facing two threats: generative AI and the possibility that the company would have to ditch 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 like a monopoly. The search business benefits greatly 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, 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 decided to impose lighter sentences for its antitrust violations. The dissolution of the company was not necessary. While he had to make some concessions, they were relatively minor and, considering the variety of outcomes the company could have faced, things couldn’t have worked out better.
All of these elements contributed to the stock being undervalued in early 2025. However, when they were resolved, its valuation rose back to parity with its big tech peers. As a result, the major catalyst from 2025 will no longer be applicable in 2026.
GOOG PE Ratio data (ahead) from YCharts.
It is now trading at 30 times forward earnings, which I would say is a very reasonable price in the current environment for Big Tech. From here, we can expect its share price movements to be somewhat correlated with its earnings growth.
With this in mind, what could Alphabet’s stock price be at the end of 2026?
Alphabet’s revenue is expected to grow about 14% in 2026. That rate is around the bar that all big tech companies must clear to be attractive investments.
If we assume it will still trade for 30 times forward earnings at the end of 2026, we’ll need to use projections for 2027. By 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 around $383, about 14% above the current level.
Because that’s above the market’s average annual return of around 10%, I think Alphabet is a great stock to buy now, but if the market goes up more than 10% (like it did in 2025), Alphabet could still underperform despite what most would consider a successful year.
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Keithen Drury has positions at Alphabet. The Motley Fool has positions and recommends Alphabet. The Motley Fool has a disclosure policy.
Prediction: This will be Alphabet’s stock price by the end of 2026 originally posted by The Motley Fool
