Analysts suddenly say Google is the place to be in

Very few times in history have investors come across a stock that offers the sort of moat that Warren Buffett could salivate over, a strong business with solid financials and a structure protecting it from competition that is always threatening to overtake its position in the market. Today, Alphabet NASDAQ: GOOGL is such a stock, though too complicated for Buffett himself.

When Bill Gates pitched Buffett an investment in his company Microsoft NASDAQ: MSFT, he replied that "the internet won't change the way people chew gum." showing his resilience to avoid investments he cannot understand in a single sentence. This could be why he skipped on Alphabet despite it possessing all the metrics he typically looks for.

The two largest search engines in the world are Google and YouTube, both owned by Alphabet and in case you don't get out there too much, people have adopted Google as a verb as "Google it" sounds more befitting than saying "Bing it." Analysts built their price target boosts on this moat and many other factors.

Unshakeable 

Billions of dollars are spent annually to generate business advertising content. Of course, the content needs a platform to connect potential customers to advertised products and services. Today, not as many ads are being shown on radio and television as they once were; here's where they are:

Most advertising content ends up on platforms like Instagram, which is owned and operated by Meta Platforms NASDAQ: META, and everything else pretty much is within websites hosted by Google or videos stuck inside YouTube ads.

Because of this incredible positioning by Alphabet, it would be extremely hard for any new competitor to come in and sweep under them to take away market share. No technology stock compares to how well-positioned Alphabet is, not only as an advertising mecca but also as the world's online library.

Some say that data is the oil of this century; whoever has access to the world's data and sentiment will essentially have a crystal ball, and in this case, that can translate to markets remaining bullish on a stock like Alphabet. Every time you Google something, you are generating data.

A $1.7 trillion market capitalization, which makes Alphabet one of the largest companies in history, is still undervalued. While there is no way to place a value on the billions of datapoints that Google collects every second of every day, it's hard to say how high this stock could go, but here's a more concrete way to put it.

When taken as a five-year average, the business generates an average ROIC (return on invested capital) rate of 17.0%. Because stock prices tend to follow the long-term ROIC rates, this stock could fundamentally become a wealth multiplier for its investors.

It's good and it shows

Because of its immense moat, Alphabet can keep raking in profits year after year. Because it counts on a more than capable management team, these profits are allocated to keep the rates of return where they are today, making everyone financially involved very happy.

Analysts know this, which is why they've been very comfortable raising their price targets for the company, making it one of the darlings within the Invesco QQQ NASDAQ: QQQ, which has, of course,, outperformed the broader S&P 500 by as much as 29.8% during the past twelve months.

While the consensus price target for Alphabet is $147.5 a share, which only gives it a 5.6% upside from today's prices, analysts at places like Roth Mkm and Tigress Financial see the stock valued as high as $166.0 and $176.0, respectively. 

These differing views would send the stock toward new all-time highs, as its ceiling is currently set at $151.5 a share when it touched during the first quarter of 2022. 

Here is the sweetener: the internet software and services industry trades at an average price-to-earnings ratio of 32.1x today, landing Alphabet stock at a discount of 25.3% to the sector with its lower 24.0x P/E.

Being one of the space's biggest and most vital names should command a more premium valuation. If you understand the reasoning behind that logic, you know why Alphabet could be headed to new highs.

Even if new ceilings take longer than expected, you can rest assured that Alphabet's management will keep pumping out double-digit ROIC, which will inevitably act as the magnet to keep pulling the stock price higher, and who knows, maybe even the rest of Wall Street analysts will come to their senses and upgrade the stock in a single wave.