Alphabet stock is still below $100. Can it last?

The past few months may not have been a good time to be a technology investor. Or maybe not – depending on the time frame of the investor. Take Google parents Alphabet (NASDAQ: GOOG ) (NASDAQ: GOOGL ) is an example. Alphabet shares have fallen 28% in a year and are now trading at less than $100 per share.

This may not sound like good news. But as a long-term investor, I see this as a great opportunity to load up on Alphabet stock. This is exactly what I have been doing for the past several months.

Value Alphabet

When considering any stock to add to my portfolio, the question I ask myself is whether the company will be valuable in the long term and how it compares to the price at which I can currently buy the stock.

Although Alphabet’s shares are trading below $100 each today, this means that their total market capitalization weighs in at $1.2tn. That’s a lot of money.

But I think the company’s long-term earning potential means it’s cheap.

Last year, the company generated $60bn in net income. That suggests that it is now trading at a price-to-earnings ratio (P/E) of around 20. But last year’s earnings were 22% below the level of the previous year.

Although they are suffering from problems such as advertising downturn, in the coming decade I expect the company’s earnings to grow not shrink. It has a large installed customer base, a service ecosystem that makes it easy for users to jump ship, a proven business model, and a strong collection of brands.

On the basis, I think the forward P/E ratio for Alphabet stock is well below 20. I see that as an attractive price for such a quality company, I have strong prospects.

Buy now or wait?

However, clearly not all investors share my enthusiasm. Alphabet stocks may go down from here as investors have pulled money out of tech stocks. So Alphabet faces multiple risks.

Although I am optimistic that advertising will bounce back, that may not happen anytime soon. AI could also eat into Google’s core search business, while a raft of rivals could threaten to chip away at Alphabet’s position. In addition, there is a long-term risk that regulatory action could affect the profitability of the company.

So have I bought it?

Waiting in the hope of Alphabet stocks losing ground and buying even lower is a form of market timing. And that’s difficult, if not downright impossible.

Why wait? I see Alphabet’s current share price as offering an attractive valuation for an excellent business.

I have bought and plan to continue for the long term, so the price remains below $100 for some time is not important to me. In fact, if I had money to invest, I would see it as an opportunity to buy more for my portfolio.