Huge News for Alphabet Stock Investors! | GOOG Stock Analysis

We got some massive news for Alphabet stock investors that sent the stock price higher by 3% on Monday. Of course, I'm happy about that. I own Alphabet stock in my portfolio and I've ranked Alphabet stock as a buy since 2019, since as long as I can remember. So, I'm happy to see the share price booming according to its latest developments and it's justified based on the improving business fundamentals. In this video, I'll highlight what this news was that sent the share price higher. I'll share with you my updated fair value estimate for the company and I'll remind you of my buy, hold, or sell rating on Alphabet after the latest developments. I want to thank The Motley Fool for sponsoring this video. Visit fool.com/parkev for the 10 best stocks to buy now. So, the news that's sending Alphabet stock higher is that the company is developing a server chip designed to optimize its Gemini AI model, according to the information. Citing people familiar with the matter, the report stated that the new chip called Frozen V2 could be launched as soon as 2028. Of course, this will be different from Google's Tensor Processing Units or TPUs, which are already in production. This new semiconductor would run 6 to 10 times more efficiently and respond to queries more quickly than its current custom chips. And it's understandable for investors to be excited about this news because of the success that Alphabet has had with its TPUs, which have been in development for nearly a decade, maybe even longer than that, correct me if I'm wrong. And so, the company has had success in developing its own proprietary chips for its own internal use cases, for its own internal needs. The TPUs were great for the business, according to what it needed to do, which for the better part of the previous decade was to serve up Google search results, to power YouTube, and its various other products that it offers. So, now that the business is changing, more of the needs are towards artificial intelligence. It of course it has its Google Gemini large language model, which is approaching 1 billion monthly active users, and it needs it more for inferencing on that large language model. Those needs require a custom chip that serves the precise use case in order to become more efficient, right? You could use TPUs for Google Gemini, but it would be more optimized if you create a chip specifically for what the inferencing of Gemini models require. And so, investors are optimistic about Alphabet's prospects here, being a full-stack AI provider. And what that means is they have the large language model, they develop chips, they have the data centers, they have the business that supports the large language model, the customers, right? They have six different products that have over a billion monthly active users. And so, each of those products can be enhanced with its AI capabilities to deliver value across the board, and to increase the average revenue per user across those products, and enhance that customer value proposition. Of course, Alphabet's been one of the better performing large-cap hyperscalers in 2026. Its stock is up 12 and 1/2%. It's in line with the S&P 500 index, a little bit better than the S&P 500 index as of this recording and better than its big cap tech peers in this segment. Investors have liked what they've seen from Alphabet so far and this is just another increment of the company delivering excellent results. The share price is now trading and the company is now trading at a forward price to earnings of 23.99 or 24 which is near the higher end of where this business has traded for going back a couple of years. Especially if you go back to 2024, remember when the company investors were scared of how artificial intelligence would impact its Google search business and remember I informed investors that those fears were overblown and in 2024 I ranked Alphabet as the best stock to buy and it soared as a result. Of course not not as a result of my uh recommendation. I don't have that much influence over the market but as a result of the company convincing investors that it won't be disrupted by artificial intelligence and instead AI will be an enhancer to its business rather than something that crushes its business. So I also updated my fair value estimate for Alphabet today. I now calculate the fair value of this stock to be $379. The current market price is $352. So the stock still looks undervalued despite the solid start to the year and despite the solid performance over the previous several years, it still looks like a reasonable opportunity and I'm happy to see that. As I mentioned, I own Alphabet stock myself and given these latest developments and given the valuation, I'm not interested in selling any of my Apple shares anytime soon or I should say Alphabet shares anytime soon. So I will reiterate that buy rating on Alphabet stock today, July 20th, 2026, and I'm reiterating that buy rating with a high conviction level. You can see this row here is my conviction level. I rank between high, medium, and low. And then I have a buy, hold, or sell rating. And of course, the stocks that I really believe in, I have them ranked as a top 12 stock. So, Alphabet ranks up there as a buy rating with a high conviction, updated on July 20th 2026. And my 2026 price target for Alphabet stock is in a range between $360 per share to $410 per share. And I updated that on July 13th, 2026.