<div id="readability-page-1">There are only seven companies in the world with a market capitalization of at least $1 trillion. Among these businesses, only Microsoft, Apple, Nvidia, and Alphabet (GOOG 1.06%) (GOOGL 1.08%) have reached an even more exclusive club. No, I'm not talking about gaining access to the &#34;Magnificent Seven&#34; -- although each of those companies is in that club, too. All four of these tech giants have a market cap of at least $2 trillion, and Alphabet is the newest member to reach that milestone. Following an encouraging first-quarter earnings report, Alphabet's shares have soared as high as 9%. Is it too late for growth investors to scoop up shares in Alphabet since eclipsing a $2 trillion valuation? I don't think so. In fact, now looks like as good a time as ever to scoop up some shares. Let's explore why. <h2>Don't sleep on the advertising business</h2> One of the biggest knocks against Alphabet over the last couple of years is that its core advertising business has been slowing down. Stiff competition from Meta Platforms, TikTok, and some smaller players, such as Pinterest and Snap, have found ways to attract cyclical advertising dollars away from Alphabet. What I think investors are missing is that even though Alphabet's advertising business may not be growing at levels seen in the past, this segment remains enormously profitable for the company. In fact, Alphabet's advertising and services operations account for nearly all the company's operating income -- with cloud computing contributing nominal profitability. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/ecd72ada54c8dda8079ca924837cdf87.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="456" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/ecd72ada54c8dda8079ca924837cdf87.png"/> GOOGL Revenue (Quarterly) data by YCharts. The chart above demonstrates the growth in Alphabet's operating income relative to revenue. Although Alphabet's revenue has started slowing down a bit, the company is still achieving an impressive level of operating efficiency. This has resulted in significant margin expansion and robust free-cash-flow generation for Alphabet. It's these excess profits that are fueling the next frontier of Alphabet beyond advertising. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzc3NzM0MS9nZXR0eWltYWdlcy0xNDg3NDcwMjcyLmpwZyZvcD1yZXNpemUmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzc3NzM0MS9nZXR0eWltYWdlcy0xNDg3NDcwMjcyLmpwZyZvcD1yZXNpemUmdz03MDA"/>Image source: Getty Images. </div> <h2>An end-to-end artificial intelligence platform</h2> The hottest ticket in the technology realm right now is artificial intelligence (AI). Over the last year or so, Alphabet has made a number of strategic investments in AI. Namely, the company's generative AI model (called Gemini) is Alphabet's response to the highly popular ChatGPT. Although ChatGPT may have a first-mover advantage, Alphabet has a secret weapon of its own: data. Remember, Alphabet owns Google and YouTube -- the world's top two most visited websites. Alphabet collects an unprecedented amount of data. Considering large language models (LLMs) essentially rely on vast libraries of data, Alphabet has a competitive advantage that will be hard to match. Where Alphabet really has an opportunity to leapfrog the competition is in integrating AI across its entire ecosystem. While Alphabet may be best known for Google and YouTube, keep in mind that the company also has a workplace productivity suite akin to Microsoft Office and a budding cloud computing business that grew 28% just during the first quarter. <h2>The valuation narrative is compelling</h2> The chart below benchmarks the forward price-to-earnings (P/E) ratio among mega-cap tech. Alphabet's forward P/E of 22.6 is the lowest among this cohort. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/0deb5fd16511268180c421dc262176d3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="541" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/0deb5fd16511268180c421dc262176d3.png"/> GOOGL PE Ratio (Forward) data by YCharts. PE = price to earnings. Shares in Alphabet rose significantly following first-quarter earnings due to the company's demonstrated growth across the business and the strides it's making in AI. Yet, even after a big upswing, the company is still valued at a noticeable discount compared to most of its peers. It's very possible that many investors are still narrowly focused on advertising revenue and missing the bigger picture: margin expansion, rising cash flow, and how Alphabet reinvests these profits. I think Alphabet stock is dirt cheap right now, and I see the disparity in valuation multiples above as a compelling buying opportunity. Now looks like a lucrative time to take advantage of the current trading activity in Alphabet and scoop up some shares. </div>

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Alphabet's market capitalization has reached $2 trillion, making it one of only four companies in the world to achieve this milestone. Despite competition in the advertising industry, Alphabet's core advertising business remains profitable and its operating efficiency has led to margin expansion and strong cash flow. The company's investments in artificial intelligence and its valuation compared to peers make Alphabet stock an attractive buying opportunity.

Is It Too Late to Buy Stock in the Newest Member of the $2 Trillion Club?

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