The recent tech selloff made this artificial intelligence (AI) stock an even better buy

Purchase Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stock is rarely a bad idea.

Imagine picking up $1,000 in Alphabet stock on February 25, 2014. That turned out to be the worst day of the year to get into the tech giant’s stock. The day’s peak at a record price of $30.50 per split-adjusted share was followed by an 18% decline over the next 10 months. Bear bait has tightened as European regulators consider breaking up the company, Android phone sales have struggled, top executives have left and new product ideas like Google Glass and Waymo’s self-driving cars have not caught.

That’s okay, though. If you had kept that $1,000 investment hard, you’d have a market-beating $5,310 in your pocket about 10 years later.

Alphabet stock stumbled before — and came back swinging

Of course, you would have done even better if you invested in Alphabet on any other day that year, but the company overcame its problems and outperformed the broader market even from the worst possible start to 2014. I expect future generations to say similar things about buying Alphabet stock in 2024 — that investment should beat the market for many years or even decades to come, no matter how badly you timed the purchase.

Time in the market beats time in the market, you know. And this company was built to last for a very long time.

I can’t think of a single company more likely than Alphabet to deliver solid returns in 2040, 2050 and beyond. That terrible drop in prices in 2014 is a barely detectable rush so far. And Alphabet’s business results continued to grow:

Alphabet stock is a bargain right now

Hang in there — it just gets better. In addition to Alphabet’s tank-like holding power, the stock happens to be unusually affordable right now.

After hitting another all-time high of $191.40 a share in July, Alphabet shares retreated 15% to around $162 a share. As I write this, it trades at 23.4 times trailing earnings, with a price-to-earnings-growth (PEG) ratio of 1.1. These are the most affordable earnings-based valuation ratios among the “Magnificent Seven” of tech giants.

Moreover, Alphabet has had a leading role in the artificial intelligence (AI) boom. Google Cloud is a popular cloud computing platform where other companies can train and run their own AI platforms. Google’s Gemini chatbot competes directly with OpenAI’s ChatGPT in language understanding and generation. The company is poised to make the most of generative AI as a long-term growth catalyst.

The story continues

I could go on, but you get my point. Alphabet stock was a good investment before the recent selloff, and it’s an even better buy today. Market sales can be your friend when you want to invest in a great company like Alphabet.

Should you invest $1,000 in Alphabet right now?

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Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. Anders Bylund has positions in Alphabet and the Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet and the Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

The recent tech selloff made this artificial intelligence (AI) stock an even better buy was originally published by The Motley Fool