Alphabet's Q2 Beat Triggers Fresh Attention Amid Valuation Concerns

Alphabet's (GOOGL) recent Q2 earnings beat has put the company back in focus, especially among institutional investors. Google Cloud and AI tools such as Gemini and Google Ads automation are drawing attention due to their impressive growth.

The Q2 results come after a mixed few months for Alphabet, with its share price increasing by 8.86% over the past 30 days but decreasing by 10.50% over 90 days. The company's longer-term momentum remains strong, with a 1-year total shareholder return of 67.42% and a 3-year total shareholder return of about 17x.

However, some analysts believe that Alphabet may be overvalued, with a fair value estimate of $202.62 based on its current price-to-earnings ratio (P/E) of 17.4x. This is higher than the US Interactive Media and Services industry average of 15.4x but lower than its peer average of 29.6x.

Despite this, Alphabet's AI story remains strong, with its Q2 bounce and sharp pullback over 90 days leaving investors wondering whether most of the re-rating has already occurred or if there is still meaningful upside ahead.