Looking at the stock today however, I see similarities to Alphabet (NASDAQ: GOOG) (Google) back in mid-2025 when it was out of favour and trading near $150 (it has since soared to near $400). Here’s why I think Microsoft could be set to surge at some point just like Alphabet has.

Examining Alphabet’s rebound

In mid-2025, a lot of investors were completely writing Alphabet off. The theory was that ChatGPT was going to disrupt Google search and destroy Alphabet’s business model.

Alphabet didn’t sit around doing nothing as people started to use ChatGPT for search. Instead, it used its financial resources and tech expertise to build an AI product equally as good (Gemini), and then integrated it into its ecosystem, winning back market share.

Additionally, it worked on developing its own powerful AI chips, tensor processing units (TPUs). It’s now selling these to other tech companies, meaning that it has a whole new revenue stream.

Ultimately, it was able to adapt to the changing business landscape and continue thriving (its latest earnings showed revenue growth of 19% at constant currency). As a result, its share price has rebounded, soaring to new all-time highs.

Could Microsoft do the same thing?

Now, I reckon Microsoft is capable of a similar turnaround. Today, it’s out of favour because people are expecting its software sales to fall due to AI disruption and automation. This is a risk. But here’s the thing – Microsoft’s finding new ways to generate revenue.

For example, in its recent earnings it told investors that its AI-powered digital assistant service Copilot now has 20m paid enterprise seats. This service costs around £15 a month per user, so that’s a fair bit of revenue.

Meanwhile, like Alphabet, Microsoft’s also developing its own chips. Earlier this year, it announced the launch of Maia 200 – an inference chip designed to improve the economics of AI token generation.

These chips are not being sold to other companies today. But if the company was to sell them to other businesses, there could be a whole new source of revenue.

Ultimately, there are many ways that Microsoft could reinvent itself for the AI era. I expect it to do just that – this is a company with a history of evolution.

The stock’s cheap today

Zooming in on the valuation, Microsoft looks quite cheap. Looking at the earnings forecast for the year starting 1 July, the forward-looking price-to-earnings (P/E) ratio’s only 21. At that multiple, I see the potential for an upward valuation rerating if the company can show that it’s having success in the AI era. In the past, it has often traded on P/E ratios in the 30s.

Of course, there are no guarantees the stock will perform well from here. AI automation is a risk and sentiment towards the stock could remain weak.

At current levels however, I like the risk/reward set-up and believe the stock’s worth considering. It’s worth noting that the average analyst price target is $564 – about 35% above the current share price.

The post Could buying Microsoft stock now be like buying Alphabet in mid-2025 at a share price of $150? appeared first on The Twelfth Magpie.

The question is – which is the better option to consider buying for an ISA today? Is it smarter to go for the high-flying Alphabet or the beaten-up Microsoft?

Which tech company’s performing better?

Both companies produced strong earnings reports earlier this week. However, Alphabet’s was the stronger of the two.

For the quarter, it posted:

• Total revenue of $109.9bn, up 22% (19% at constant currency).
• Cloud revenue of $20bn, up 63%.
• Earnings per share (EPS) of $5.11, up 82%.

One highlight of its results was that Gemini Enterprise saw 40% quarter-on-quarter growth in paid monthly active users. This shows institutions are increasingly using Alphabet’s AI services.

Turning to Microsoft, it posted:

• Revenue of $82.9bn, up 18% (15% in constant currency).
• Cloud revenue of $54.4bn, up 29%.
• EPS of $4.27, up 21%.

On the earnings call, CEO Satya Nadella said that Microsoft Copilot now has 20m paid enterprise seats. This suggests its AI services are gaining traction in the business world too.

Looking at the numbers, both companies are performing well. But it’s hard to ignore Alphabet’s cloud growth – it’s very impressive.

What do analysts like more?

After the earnings, Wall Street analysts have been scrambling to update their price targets for Alphabet. I counted increases from 23 different firms. The average price target of those firms is $427. That’s about 17% above the current share price.

Turning to Microsoft, the broker activity wasn’t as bullish. While some analysts raised their price targets, others reduced them. That said, the average price target here is still well above the current share price at $569 (about 40% above). So analysts remain very bullish in general.

Which stock’s cheaper?

Focusing on valuations, Microsoft is the clear winner here. After Alphabet’s recent rise, it’s now quite expensive – its forward-looking price-to-earnings (P/E) ratio is about 29.

Looking at Microsoft, it’s trading on a forward-looking P/E ratio of about 21 when we take the earnings forecast for the financial year ending 30 June 2027. So it’s far cheaper than its Mag 7 rival.

Which is riskier?

As for risks, both companies face them. For Alphabet, a major risk is a slowdown in advertising spending. From an investment perspective, the valuation’s also a risk – this doesn’t leave any room for a slowdown.

As for Microsoft, a key risk is white collar job losses – this could lead to less software license revenue. Another is the company’s exposure to OpenAI – ChatGPT’s losing market share to Gemini and Claude.

My call

Weighing all this up, it’s actually really hard to pick a winner. Alphabet has more momentum right now, both operationally and from a trading perspective, but Microsoft’s far cheaper.

Ultimately, I think the best stock to consider comes down to an individual’s investment approach. If more focused on momentum, Alphabet is in a strong uptrend. However, when more focused on value, Microsoft looks cheap.

The post Alphabet could rise to $427 say analysts, but is Microsoft the better Mag 7 stock to consider buying for an ISA? appeared first on The Twelfth Magpie.

Both revenues and profits grew significantly. But the real highlight for investors was the growth in the artificial intelligence (AI) division.

Growth

Alphabet’s overall revenues in the first quarter of 2026 grew 22%. That’s a big number, but earnings per share increased by a massive 82%.

Part of that was due to a revaluation in some of the firm’s investments. But operating income – which excludes this – was still up 30%. 

There’s nothing to dislike there. Beneath the surface, however, the real highlight was the firm’s Google Cloud division, which grew 63%. 

That matters for a couple of reasons. One is that it means Alphabet’s cloud computing division is growing faster than Amazon or Microsoft.

The other is that it goes a long way towards justifying the ongoing investments in data centres. It’s a sign that – at least for now – there’s real demand.

Alphabet’s results were terrific. But with the share price now up 131% in 12 months, is it too late to consider buying?

Google Cloud

Google Cloud’s 63% growth is hugely impressive. It’s well ahead of the 28% that Amazon’s AWS achieved in the same quarter. 

Investors should note, though, that this is partly a function of size. It’s not the result of Alphabet’s unit generating higher revenues. 

In terms of sales, AWS added $8.32bn while Alphabet’s unit added $7.8bn. That amounts to a different growth rate because Google Cloud is smaller.

I think that’s important for investors. It doesn’t suggest to me that customers are choosing Alphabet over Amazon – at least, not yet. 

As I see it, the latest results indicate that both are doing well. It’s just that AWS is a bigger business and this is what leads to higher growth rates.

To some extent, that doesn’t matter – Google Cloud has more market share available to win. But I think it’s worth keeping in mind for investors.

What’s coming next?

Alphabet announced that it’s planning on increasing its spending to between $180bn and $190bn this year. And it’s expecting this to be a lot higher in 2027.

That’s not as much as Amazon. But it’s a lot in the context of a cloud division with significantly lower quarterly sales.

Investors had been viewing this with suspicion. Strong demand for computing power, however, seems to have alleviated those concerns.

That makes sense. It does, however, offer a marked contrast to the way the stock market is viewing software companies at the moment. Several software firms have been reporting strong earnings. But they don’t seem to be able to do anything to convince investors that their growth is durable.

I think it’s worth keeping something similar in mind with Alphabet. The latest update is very strong, but one report doesn’t make an investment thesis.

Opportunity missed?

Its results are outstanding and it’s no surprise to see the stock rising. Right now though, I don’t think it’s the most obvious cloud computing stock. 

With its antitrust issues of last year now well behind it, the business looks very attractive. But at today’s prices, I’m looking at other opportunities in this space.

The post Alphabet stock surges 7.05% after Q1 earnings! But is it too late to consider buying? appeared first on The Twelfth Magpie.

Indeed, just yesterday (8 April) we saw some shares surge on the back of the latest developments in the Middle Eastern war.

But while that may offer some short-term relief to investors, I think it is also a stark reminder of how fragile investor sentiment currently is. Yesterday was a good day in the stock market – but there could be more painful days ahead.

I think now is the perfect time to get ready for a dramatic stock market crash, in fact.

The value of preparation over market timing

That does not mean I necessarily expect a crash soon.

Sure, I see lots of reasons why a dramatic crash could make sense. Oil prices have lately surged. That will probably push up inflation substantially.

Geopolitical tensions are high, shipping rates are all over the place and investors are nervous. None of those factors tend to be positive for the stock market overall.

But markets can and do defy negative circumstances. Conversely, sometimes they struggle even when the economy is strong and businesses are doing well.

That is why it can be a costly mistake to try and time the market.

We know it will crash sooner or later. I also reckon there are good reasons why that could happen soon – but there is no certainty it will. As John Maynard Keynes said, markets can remain irrational longer than you can stay solvent.

My solution?

Instead of trying to time the market, I am getting ready scoop up some potential bargains in the next crash – whenever that turns out to be.

Separating business quality from current share price

In practice, that means I am updating a watch list of companies that I would like to invest in if I could do so at an attractive price.

These are firms I think have great businesses. So, you may wonder, as a long-term investor, why do I not simply buy them now?

The answer is valuation.

Even a great company can make a poor investment if someone pays too much for it.

As stock market crashes can be short-lived, I want to be ready to act when the next one happens. That could happen at any moment, so I see now as the time to keep my list updated.

Here’s a share I have my eye on

One name on my list is Google owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Its share price has surged 180% over the past five years. At 29 times earnings, it may not look as obviously overpriced as some tech firms.

Still, that price is too high for my tastes. Alphabet faces risks ranging from its massive investment in AI infrastructure not paying back to a weak economy eating into advertisers’ willingness to spend on YouTube ad slots.

Still, the underlying business remains strong.

Google, YouTube and other Alphabet businesses benefit from the company’s tech strength, massive user data and strong brand awareness.

The motive to switch to a different provider is often low. Barriers to switching can be high for Alphabet’s enormous installed base of regular users. That ought to help long-term profitability.

The post I’m getting ready for a dramatic stock market crash appeared first on The Twelfth Magpie.

In reality, though, a crash can be terrifying for some share owners, but a terrific opportunity for other investors.

Let me explain why.

When, not if

Just as British people famously love to talk about the weather even with no control over it, some investors love to pontificate on what might happen next in the market despite having no influence over that.

The reality is that nobody knows with certainty when the next stock market crash will be. A lot of time and effort is spent trying to time the market. To my mind it is poorly spent.

While we do not know when the next crash will be, history teaches us that there will be one sooner or later.

That could be tomorrow – or it could be years from now. Either way, I think it pays to be prepared and try to turn a stock market crisis into an investing opportunity.

What a crash really means

One reason people fear a stock market crash is because they are worried it could send the value of their share portfolio plummeting.

That is true – and it can be an alarming thing to experience.

But – and this is a crucial point – that is only the paper value. In other words, the market is providing a constant valuation of their shares but they can ignore it if they choose.

It is like owning a home, boat, coin collection, or anything that has some market value. That value may go up and down while you own it. But until you sell, any loss or gain is just on paper.

Mixing the wheat and the chaff

Some shares go down in a stock market crash and recover only slowly, if at all.

Maybe they were overvalued in a pre-crash bubble. Or perhaps the crash and wider financial shifts have changed their underlying business value.

But as panic grips the market and people start dumping their holdings, sometimes indiscriminately, perfectly good shares can be dramatically marked down in price even though their underlying investment case may not have changed.

That can be an opportunity to scoop up some blue-chip bargains.

Getting ready now

Such opportunities, though, can be short-lived. So it makes sense to be ready.

To that end, I make and update a shopping list of shares I would like to own, if only I could buy them at an attractive enough price.

One name on my list is Google and YouTube owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The share has been buffeted at points over the past couple of years by concerns about whether AI will hurt its search business. But that seems like ancient history now, given how the Alphabet stock price has been doing. For now, it remains too high for me to buy.

I do think AI could be a risk to search. But it could be an opportunity too. It may help Alphabet customize its content even more and deepen its already strong customer loyalty.

Alphabet has a proven business model that generates large amounts of cash (though AI expenditure could eat into that).

It owns strong brands, has a massive customer base, and has the technical expertise to try and turn AI to its advantage, in my view.

The post If the stock market crashed tomorrow, what would that mean for investors? appeared first on The Twelfth Magpie.

The idea of computers driving cars safely would’ve been science fiction only a few years ago. It is now not only happening, but threatening to be rolled out worldwide and bringing in the kind of productivity increases only seen in once-in-a-generation inventions like the internet, the steam engine, or the printing press. And it might mean certain stocks end up being the best investments going…

Leading the pack

Leading the pack is Waymo, which will be running the trial in London this year. Waymo is a division of Google owner Alphabet (LSE: GOOG) and is already running driverless taxis in cities in America. It aims to be in 20 cities by the end of the year (along with London and Tokyo).

Early signs are promising. The taxis run well, are liked by consumers, and rarely encounter issues like getting stuck or causing accidents. The problem is that they operate under simple road systems that are well-mapped. Rolling the tech out on a larger scale, particularly in rural areas, might be more of a challenge.

The other company to get a foothold is Tesla (NASDAQ: TSLA) which is running a pilot program – albeit still using backup drivers in the car in case of failure. While the Tesla robotaxis seem to be behind in the race, they may have an ace up the sleeve – vertical integration.

The plan is for Full Self Driving – Tesla’s autonomous service which can be used by owners of the vehicles – to reach a point where they can ‘solve’ autonomous driving on all roads and in all conditions. If this ambitious goal is reached then it could be rolled out on a grand scale for taxis, personal cars, and even delivery and public transport vehicles.

Other options?

It will probably not escape notice that these options are huge companies with a lot more going on. Waymo is just 2% of Alphabet’s market cap according to one estimate. The self-driving part of Tesla is more integrated but still a single part of a $1.3trn company. This is a serious disadvantage for those looking for a pure driverless revolution play. Nonetheless, I think both are worth considering.

A third ‘wild card’ option is the Chinese company Baidu. The firm is apparently already running trials in Beijing. The country was much quicker to adopt electronic payments which might suggest it will be quicker to adopt autonomous vehicles too. However, I can’t say I’m interested in investing in Chinese companies, given potential government overreach.

There are other options like LiDAR (a movement detection system) firms, such as Ouster and Hesai Group, that provide part of the vital technology for the vehicles. Another possibility is Kodiak Robotics, a company that specialises in autonomous driving technology for larger vehicles like trucks.

Only time will tell if any of these go on to be once-in-a-generation opportunities. But, I think it’s worthwhile for investors to be aware of them all.

The post Is 2026 a once-in-a-generation opportunity to buy autonomous vehicles growth stocks? appeared first on The Twelfth Magpie.

The company outlined plans to increase its artificial intelligence (AI) spending to huge levels in 2026. But what does that mean for the company and the wider stock market?

Outstanding operations

Advertising revenues were up 14% and Cloud sales increased by 48%. And operating income growth was even more impressive, coming in at 22% and 154%, respectively.

Investors used to wonder whether the shift to AI search might threaten Google’s search position. But the Gemini app reached 750m monthly active users, so that answers the question for now.

Everything seems to be going well, but the real number investors were watching was the planned spending for 2026. And CEO Sundar Pichai guided for somewhere between $175bn and $185bn.

It’s a huge number that means a lot for the company and its shareholders. But it also has implications for the wider stock market.

$175bn

For context, $175bn is well above what Meta Platforms expects ($115bn-$135bn) to spend this year. And it’s more than twice Alphabet’s free cash flows for 2025 ($73bn). 

It’s also more cash than the firm has on its balance sheet. So I suspect the company is going to have to finance its spending by taking on debt.

There’s nothing intrinsically wrong with that – it’s probably the right decision if it can get a good return on those investments. But it is risky, especially given the uncertainties around AI profits.

Google Cloud has done well, but there are real questions about where profits are going to come from for the likes of OpenAI and Anthropic. And that makes investing on this scale a big risk.

What it means for the stock market

Alphabet’s big commitment has some serious implications for the wider stock market. It’s a positive sign for the companies that make the equipment that goes into data centres.

Given where those stocks are priced at the moment, a cut in capital expenditures could have seen share prices crash. But demand seems like it’s going to remain strong – at least for another year.

On the other side of the coin, it’s not likely to be good news for software companies that have been under pressure recently. Alphabet’s plan is a clear sign of more AI applications on the way.

A drop-off in data centre spending might have disrupted the competition that’s been threatening some of the biggest names in the industry. But there’s no sign of the pressure letting up yet.

Final Foolish thoughts

My view is that investors could consider buying the stock at today’s prices. If the AI story continues to develop in a positive way, the company should more than justify its current share price.

But I also think that it’s worth looking at some of the beaten-down software stocks to help offset the risk. If – for whatever reason – things don’t go to plan, these businesses stand to benefit.

There’s still a lot of uncertainty around exactly what AI will achieve. But I think investors can look to be smart by playing both sides – and Alphabet is a good stock to consider as part of this strategy.

The post Alphabet’s $175bn bombshell just sent a message to the entire stock market appeared first on The Twelfth Magpie.

Don’t try to time the market

Buffett has sat on large piles of cash at points, leading some to think he was trying to wait for a big enough market downturn to spend. But he is smart enough to know that nobody can time the market with total confidence – and he does not try to do so.

Instead, his approach has been to buy individual shares when he thinks they are attractively valued, hold them for the long term, and then sometimes sell them.  

That can look like timing the market because it involves buying shares at what look like cheap prices. Often, a good moment to do so is following a stock market crash.

But buying bargains when they appear is not the same as trying to time the market. Buffett did not pile into dotcom stocks then hope to bail out on a big profit before the market peaked, for example.

Sticking to what you know and understand

In fact, Buffett did not bother buying any dotcom stocks at all back in the heady days of the turn of that era. Nor did he buy leading AI shares before stepping down as chief executive of Berkshire Hathaway at the turn of this year.

There is a simple reason, even before getting onto valuation. Buffett likes to stick to what he understands. He long expressed a belief that he did not have the necessary knowledge to judge whether tech companies had the sort of business characteristics he looked for.

Only years later did he invest in IBM and Apple.

A Buffett-like moat

One tech share he and partner Charlie Munger mused about missing out on was Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The reason was that, in this case, they felt they did have insights into Google and failed to act on them. Berkshire owned a business that was already splashing a lot of cash buying ads on Google, so Buffett and Munger could have put two and two together to see the wider potential of the Google business.

Alphabet has several characteristics Buffett likes in a stock and one is its ‘moat’. This is how Bhe describes a competitive advantage that keeps rivals at bay.

Google’s moat comprises its huge volume of user data, proprietary technology and a proven money-making model not only through search but other properties like YouTube too.

AI is a risk to Google’s search dominance. It could lead to less searches and therefore less advertising revenue. But it could also present an opportunity for Alphabet, given the company’s huge amounts of organised information that could help it make use of AI itself.

Alphabet has a massive customer base and has proven highly cash generative over time (though AI costs could reduce that).

But, like Buffett, I like to buy into great businesses at attractive prices. The current Alphabet stock price is too high for my tastes, so I will not be investing. 

The post Could we be in a bubble? I’m taking the Warren Buffett approach! appeared first on The Twelfth Magpie.

The big question is how much further can this bull run go?

Let’s have a look.

Wall Street gets more bullish

If you follow my writing, you’ll know I don’t always trust institutional analysts. There are some really great ones, and some guys who are really stealing a living.

I say that because I find the consensus opinion on Alphabet really interesting. The consensus was Buy until November 2025 at which point it became a Strong Buy.

To me, however, it was clear that the stock was vastly undervalued relative to its growth potential earlier in the year. Now, in my opinion, there’s much less margin of safety.

Margin of safety diminishes

The margin of safety is the principle of investing with a significant discount between a company’s market price and its intrinsic value.

This gap provides protection against errors in analysis, adverse developments, and market volatility, helping investors minimise the risk of permanent capital loss while preserving long-term returns.

It’s something very successful investors like Warren Buffett have talked about extensively. How the investor defines fair value is up to them, of course.

For me, it’s all about relative valuation, growth, profitability, and the balance sheet.

Today, Alphabet trades around 30.6 times forward earnings — that’s about 30% above the IT sector average and 88% above the communications sector average. The price-to-earnings-to-growth (PEG) ratio is two — 20% above the IT sector average and 57% above the communications sector average.

These metrics suggest an overvaluation. So, why are analysts so bullish?

Well, it’s a quality company with great long-term drivers, including in emerging sectors like self-driving cars and quantum computing.

The market also got quite excited about the idea that Alphabet could sell its ASICs (TPUs) — an application-specific chip — becoming an Nvidia competitor in hardware.

The bottom line

For me, there is limited near-term growth potential. Search — and other Google Services — and Cloud are strong businesses but the stock is priced for these segments to do well.

So, what could that mean for a £20,000 investment in Alphabet this year?

Well, momentum is really hard to forecast and earnings beats could certainly send the stock higher. What’s more, we could have some more great news about the Willow quantum chip or the self-driving cars.

However, the key word here is ‘could’. Unless you’re working at Alphabet, you’re very unlikely to know whether these things could happen before the rest of the market.

Stripping it down to the valuation, I’m suggest Alphabet would do well to maintain its current price. But I do expect more strong operational performance. Putting them together, I’d only expect a modest return on £20,000 over the next year. Maybe £21-22k.

However, I still think the stock is worth considering for the long run. It’s a tech giant with lots of strings to its bow.

The post Prediction: in 2026 the red-hot Alphabet share price could turn £20,000 into… appeared first on The Twelfth Magpie.

Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

Here are the latest three picks from our team of experts.

• Alphabet posted its first $100 billion quarter in revenue in the third quarter, with Google Cloud accelerating to 34% growth and AI features reinvigorating Search.
• Alphabet is aiming to convert its $155 billion cloud backlog into revenue while scaling its Gemini AI models across Search, Cloud, and enterprise products.
• Investors should pay attention to AI Mode monetization rates, Waymo’s expansion to 20+ cities, including London and Tokyo, and whether the company’s heavy infrastructure spending weighs on profitability.
• Berkshire Hathaway disclosed a multibillion-dollar stake during this period, a vote of confidence that proved well timed given the stock’s 64% gain for the year as of this writing.
• A U.S. federal judge declined to force a divestiture of Chrome in September, instead ordering Google to end exclusive search distribution deals with device makers like Apple. Separately, the European Commission imposed a nearly $3.5 billion fine over advertising practices. While both cases represent ongoing challenges, investors viewed the U.S. ruling as a relative victory since the company avoided a forced breakup, and shares rose on the news.

The post Just released: the 3 best growth-focused stocks to consider buying in January [PREMIUM PICKS] appeared first on The Twelfth Magpie.