Should You Buy the Best-Performing "Magnificent Seven" Stock of 2025?

By Prosper Junior Bakiny – Dec 28, 2025 at 11:44PM ESTKey PointsAfter a tough start to the year, Alphabet shares rebounded and have outperformed those of its large tech peers. The company's financial results and a favorable outcome to a legal battle had a lot to do with that.Alphabet's work in cloud computing and AI should help power strong growth in the next few years. These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: GOOGAlphabetMarket Cap$3.8TToday's Changeangle-down(-0.24%) $0.75Current Price$314.92Price as of December 26, 2025 at 3:58 PM ETIt seems to have plenty of upside left.This year wasn't the best for the "Magnificent Seven" stocks, a group of tech -- or tech-adjacent -- companies that are among the largest on the market. The grouping includes Alphabet (GOOG 0.24%) (GOOGL 0.20%), Amazon (AMZN +0.06%), Apple (AAPL 0.19%), Microsoft (MSFT 0.06%), Meta Platforms (META 0.56%), Nvidia (NVDA +1.09%), and Tesla (TSLA 2.08%). Only three of them managed to beat the S&P 500 this year, while the remaining four are below the index year to date. There is one member of this group that left all the others in the dust: Alphabet. Shares of the Google parent company are up 63% as I write this, far above the second-best, Nvidia, at 37%. Are Alphabet's shares still attractive heading into 2026? Image source: Getty Images. Why Alphabet performed well this year Alphabet actually didn't start the year strong. However, at least two things happened that helped it reverse course. First, Alphabet posted excellent financial results. The company's work in cloud computing and artificial intelligence (AI) has been tremendously helpful. The tech leader is showing that, despite competition from AI chatbots, it remains the leader in search, while providing in-demand AI services through the cloud. Second, Alphabet had a major legal win, or at least, a loss that felt like a win. The tech giant was awaiting a decision from a judge on an antitrust lawsuit filed by the U.S. Department of Justice. Alphabet was accused of holding a monopoly in internet search, but the company managed to avoid the worst-case scenario of having to divest its Google Chrome browser, an important cog in its advertising machine. With that significant threat out of the way, Alphabet looks unstoppable. ExpandNASDAQ: GOOGLAlphabetToday's Change(-0.20%) $-0.62Current Price$313.47Key Data PointsMarket Cap$3.8TDay's Range$312.27 - $315.1052wk Range$140.53 - $328.83Volume475KAvg Vol36MGross Margin59.18%Dividend Yield0.26% What the future might hold One more reason why Alphabet outperformed its Magnificent Seven peers was that it looked more reasonably valued, at least when considering traditional valuation metrics. That remains the case (check out the charts below), and that's a good reason to be optimistic about the company's medium-term prospects.Advertisement GOOG PE Ratio (Forward) data by YCharts And one of Alphabet's most important growth drivers over the next five years will continue to be AI. It isn't just the products it offers through the cloud, or the Gemini 3 subscription available to individuals. Alphabet has implemented AI tools across its business to increase its profitability. For instance, it has improved its search algorithms using AI, as well as added AI mode and AI overviews. These initiatives lead to better results, more search volume, and higher revenue from ads. Alphabet has also used AI to help companies automate ad campaigns, making the process far easier and more productive. This also adds up to more ad revenue for Alphabet. On the other side of the equation, the company uses AI-powered algorithms on platforms like YouTube to recommend content to users, resulting in increased engagement. Beyond AI, Alphabet's Google Cloud division should drive significant revenue growth in the next few years. It's a lower-margin business than advertising, but it is growing much faster right now -- and it likely won't stop anytime soon. As Alphabet stated during its third-quarter earnings conference call, Google Cloud backlog reached $155 billion, representing a 46% increase compared to the second quarter. Alphabet also pointed out that Cloud operating margins are expanding while the company is signing new customers at a faster rate. And it is doing all this despite stiff competition from two of its Magnificent Seven peers -- Amazon and Microsoft -- both of which have a higher market share. In my view, given the strength of its advertising and cloud computing businesses, Alphabet's shares still look deeply undervalued, especially when considering other growth avenues, such as its growing number of subscriptions, which create a recurring source of revenue. Alphabet still looks attractive heading into the new year. It may or may not be the best-performing Magnificent Seven stock of 2026, but it appears likely to outperform the market over the next five years.Read NextDec 28, 2025 •By Adam LevyPrediction: 1 Artificial Intelligence (AI) Stock That Will Outperform Nvidia in 2026Dec 28, 2025 •By Rachel WarrenAre These 2 Quantum Computing Stocks the Key to Decades of Wealth?Dec 28, 2025 •By Neil PatelThis Growth Stock Continues to Crush the MarketDec 28, 2025 •By Adria CiminoThis AI Stock Is Quietly Outperforming Nvidia in 2025Dec 26, 2025 •By Keithen DruryPrediction: This Stock Will Be the Biggest Quantum Computing Winner of 2026Dec 24, 2025 •By Neil PatelThis Is 1 of the Best AI Stocks to Hold for the Next 10 YearsAbout the AuthorProsper Junior Bakiny is a contributing Motley Fool healthcare analyst covering biotechnology, pharmaceuticals, and healthcare stocks.

Before The Motley Fool, Prosper wrote about investing topics ranging from stock market news to private equity for various companies. He holds a master’s degree in corporate finance from the University of Maryland Global Campus.TMFPBakinyStocks MentionedAlphabetNASDAQ: GOOG$314.92 (0.00%) $0.75AlphabetNASDAQ: GOOGL$313.47 (0.00%) $0.62Meta PlatformsNASDAQ: META$663.80 (0.01%) $3.75MicrosoftNASDAQ: MSFT$487.74 (0.00%) $0.28AppleNASDAQ: AAPL$273.29 (0.00%) $0.52TeslaNASDAQ: TSLA$475.29 (0.02%) $10.11AmazonNASDAQ: AMZN$232.52 (+0.00%) $+0.14NvidiaNASDAQ: NVDA$190.66 (+0.01%) $+2.05*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement