Stock-Split Watch: Is Alphabet Next?

Alphabet Inc. (NASDAQ: GOOG)(NASDAQ: GOOGL) kicked off 2025 with impressive quarterly earnings that left many investors hopeful. However, despite solid performance metrics, shares have plummeted by around 18% for the year thus far. In light of this decline, some analysts are speculating that a stock split might be on the horizon, which historically has helped boost share prices in several tech giants. Let’s examine the likelihood of such a move by Alphabet and explore whether it remains a viable investment opportunity.

The Most Recent Alphabet Stock Split

Companies utilize stock splits as a strategy to lower their share prices by distributing additional shares among existing shareholders. While a stock split does not alter the fundamental value of a company, it does make shares more accessible and appealing to investors by lowering the per-share price. Alphabet executed a significant 20-for-1 stock split on July 15, 2022, converting one share worth approximately $2,255 into 20 shares priced at around $113. While this maneuver has had mixed results, it’s worth noting that Alphabet’s stock has since gained 38%, lagging behind the S&P 500 during the same timeframe.

Given the current share price scenario, the logic for initiating another stock split appears weak. The shares are relatively affordable, meaning that a further split is unlikely to drive significant investor interest. Consequently, we may not see another Alphabet stock split in the near future. However, it’s essential to look at other compelling reasons to consider adding this tech giant to your investment portfolio.

Why Alphabet is One of the Top Tech Stocks

Alphabet stands as a market leader across multiple tech landscapes. Its dominance is evident in its nearly 90% market share in the search engine arena, making Google the premier choice for users. Additionally, Android powers approximately 72% of mobile devices, and Chrome holds a leading 66% market share in web browsers. The company also owns YouTube, which was noted as the top media distributor, boasting 12% of overall TV viewing, according to Nielsen data.

Alphabet’s first-quarter revenue reported a robust $90.2 billion, marking a commendable 12% year-over-year increase. Beyond strong current performance, Alphabet’s forward-thinking approach continues to entice investors. The company is consistently investing in emerging technologies, particularly in artificial intelligence (AI), exemplified by its Gemini chatbot and the integration of AI Overviews in Google search results. Furthermore, Alphabet is at a striking discount, making this a prime moment for investors looking to capitalize on a well-established business at a favorable valuation.

The Bear Case

However, not all is rosy at Alphabet. The company faces scrutiny that could jeopardize its position, notably following a federal judge’s ruling declaring that Google had established illegal monopoly power in its online search operations. The U.S. Department of Justice is pushing for Alphabet to divest its Chrome browser and advertising business, resulting in heightened uncertainty for the company. While an appeal could alter the trajectory, these legal challenges pose significant risks.

Moreover, Alphabet’s heavy reliance on advertising—accounting for 74% of its revenues in Q1 2025—raises concerns. Historically, advertising spending tends to be among the first expenses cut by businesses during economic downturns. While this revenue segment has diversified compared to a decade ago when it constituted nearly 99% of total revenue, there is an ongoing imperative for Alphabet to continue diversifying its income sources, particularly through AI advancements and cloud services.

A Quality Tech Investment, With or Without a Stock Split

The probability of Alphabet initiating another stock split soon is low; however, the chances of it outperforming the market in the next five years are considerably higher. With a potent mix of market-leading products and groundbreaking innovations, Alphabet showcases solid financial health. The company has generated approximately $74.9 billion in free cash flow over the trailing twelve months, equipping it with the necessary resources to pursue growth opportunities.

In terms of valuation, Alphabet stands out as the most attractively priced among the “Magnificent Seven” tech stocks based on price-to-earnings ratios. For conservative investors seeking sound tech stocks without overpaying, Alphabet is an excellent option to consider for your portfolio.