Investors who decided to buy Alphabet (NASDAQ:GOOG) stock has performed incredibly well in early 2025. Since the beginning of January, the company’s shares have increased by 61%.

Heading into 2026, the company will likely be in a stronger position than it was 12 months ago. However, it seems that the rising share price is starting to awaken the intrinsic value investor in some people.

Investment equation

At first glance, Alphabet’s stock is much less attractive than it was at the beginning of the year. The price-to-earnings ratio (P/E) at which the company’s shares are trading increased from 23 to 30. This does not mean that it is overvalued, but it does mean that investors are much more bullish about the company’s future development. And that usually makes the buying opportunity less attractive.

Investors may therefore think that the time to buy Alphabet shares has passed. But the company is in a stronger – in my opinion, much stronger – position than at the beginning of the year.

In January, the company faced an antitrust lawsuit for maintaining an illegal monopoly. He had already been found guilty and the question remained what the consequences would be. Several investors were of the opinion that not much would happen, and it turned out they were right. But that doesn’t mean the risk wasn’t real or shouldn’t have been taken seriously.

For now, this threat is out of the question and is the main reason for the boost in share prices. However, there are other potential risks that investors need to think about in 2026.

Spending on artificial intelligence

The investment theme in 2025 was artificial intelligence (AI), and Alphabet was at the center of it. Strong growth in Google Cloud is another force pushing the share price up. However, investors are starting to wonder about the profitability of artificial intelligence. And this raises two separate issues for Alphabet in the context of the leading position it will consolidate in 2025.

The first is gigantic investments in AI data centers. Some of them were financed with debt, and the stock exchange is only starting to wonder whether it is a good idea.

Alphabet is not alone in this – Amazon AND Microsoft are in a similar position. But other companies facing similar challenges don’t make the stock any more attractive.

The second is AI search. Gemini has taken the lead on ChatGPT, but queries are much more pricey than time-honored search, raising questions about profit margins.

Neither issue will tip the company over for 2026. However, both issues need to be taken seriously by investors in the context of the current stock valuation.

Risks and rewards

Investing in companies always involves risk, and Alphabet is no exception. The question for investors is whether they are worth the potential benefits.

At the beginning of January, I think the stock market underestimated the potential threat from the company’s antitrust case. But the company emerged largely unscathed.

Looking ahead, the next challenge for Alphabet is to turn its AI investments into profits. With a P/E of 29, I believe there are more attractive AI opportunities to consider.