Alphabet: After Its Best Quarter in Decades, Is It Time to Buy?

Key Points

• Alphabet posted a 38% surge in Q3, its best performance since 2005, driven by a favorable court ruling and notable beats in its Q2 earnings report.
• Solid AI adoption, double-digit revenue growth, and a favorable DOJ ruling reinforced confidence in its business model.
• Shares are trading at a P/E of 26, near historical averages, with $240 as key support and $250 as the breakout level to watch going forward.

Alphabet Inc. NASDAQ: GOOGL has staged a remarkable comeback.

After lagging the market in the first half of the year, facing competitive threats in artificial intelligence (AI), pressure on its advertising stronghold, challenges to Google Search, and ongoing regulatory headwinds, the tech giant has just posted its strongest quarter in nearly two decades, in terms of stock performance.

The surge has shifted investor sentiment sharply, putting Alphabet back at the center of the conversation in big tech.

The question now: after such a surge, is it still time to buy, or has the easy money already been made?

A Historic Quarter

In the third quarter of 2025, Alphabet delivered a staggering 38% gain, its best return since Q2 2005. For a mega-cap stock with a market cap closing in on $3 trillion, such performance is rare and hard to ignore. Investors who had the foresight to buy while Alphabet was under pressure, with fundamentals intact but valuation below its historical averages, have been well rewarded. But for those on the sidelines, the dilemma now is whether this renewed strength still offers upside.

Why Q2 Results Fueled the Rally

Alphabet’s rebound didn’t happen by chance. It was driven by strong fundamentals in the company’s Q2 2025 earnings, reported on July 23. Revenue rose 14% year-over-year to $96.43 billion, beating estimates of $94 billion. Earnings per share climbed 22% to $2.31, above the $2.17 consensus.

The strength was broad-based, but two growth engines stood out: Google Cloud and YouTube. Cloud revenue increased 32% to $13.62 billion, surpassing the $50 billion mark in annual recurring revenue for the segment. YouTube’s ad revenue rose 13% to $9.79 billion, reaffirming its position as the dominant online video platform.

The most critical result, however, was in Google Search. Long seen as vulnerable to disruption from AI chatbots, search revenue instead grew 11.7%, far above analyst expectations of 8%. That performance alleviated concerns about a structural decline and suggested that AI might enhance, rather than erode, Alphabet’s core business.

Adding to the bullish narrative, Alphabet caught a major regulatory break. A U.S. court decision in the Department of Justice’s antitrust case against Google stopped short of the harshest remedies, such as breaking up Chrome or forcing divestitures. That outcome lifted a long-standing overhang and further fueled the rally.

Valuation: Not Cheap, But Certainly Reasonable

Alphabet’s fundamentals are strong again, but valuation is no longer at bargain levels. With a trailing P/E around 26, the stock trades slightly below its 10-year average of 28. Its forward P/E is elevated, but still reasonable relative to peers in the computer and technology sector.

Year-to-date, shares have increased by nearly 30%. While some may worry about chasing strength, the company continues to post double-digit revenue growth, strengthen its cloud and AI positioning, and maintain dominance in advertising. In that light, the rally may not be overextended.

Technicals: $240 Is the Key Level

From a technical perspective, Alphabet is consolidating after its explosive Q3 run. Shares recently pulled back from $255 to $240, where they’ve found firm support. This level now represents the key line in the sand.

If GOOGL can hold $240 and push above $250, it would confirm a higher low and signal the potential start of a new leg higher. Conversely, a decisive break below $240 could signal a short-term shift in momentum. With Q3 earnings due in November, volatility is likely, but so is the potential for upside if the company extends its streak of strong results.

GOOGL Is Still Worth Watching Closely 

Alphabet’s transformation from laggard to leader has been swift and decisive. Strong Q2 results, regulatory relief, and AI-driven momentum helped power its record-breaking Q3 rally. Valuation is no longer cheap, but it’s still reasonable for a company with Alphabet’s growth, profitability, and market dominance.

For long-term investors, pullbacks near $240 might be ideal entry points. For traders, a breakout above $250 could signal the next wave of momentum. Either way, Alphabet’s comeback has reaffirmed its place at the top of the tech hierarchy, and investors should keep it firmly on their radar.