Famed investor Warren Buffett once said, "Be fearful when others are greedy and be greedy when others are fearful." I think that's a perfect line to keep in mind as the market continues to sell off some of the big tech companies, as nothing has shifted in the investment thesis of these stocks.

One of the stocks that has declined from its highs is Alphabet (GOOG 1.38%) (GOOGL 1.23%). At its current level, the stock looks incredibly cheap, and investors should pounce on this bargain opportunity while fear in the market still exists.

Alphabet's AI focus has been on making its advertising tools better

Alphabet is the parent company of Google, YouTube, the Android operating system, and more. However, its wide-spanning portfolio has a focus on one thing: advertising. In the fourth quarter 2024, around three-quarters of Alphabet's revenue came from its various advertising sources, so this is a huge part of Alphabet's business.

While many are worried about Alphabet's performance in the AI arms race, this isn't the main focus for Alphabet. Instead, the company is worried about integrating AI throughout its various advertising tools, which will improve clients' ads and users' experiences. Additionally, the company has made its generative AI model, Gemini, available to the public, and it can be used as the base model to build on.

These large investments in AI training haven't impacted Alphabet's finances yet, but they don't need to. Investors need to understand that Alphabet's AI investments are table stakes to maintaining its place as a must-advertise location. Any ancillary revenue that comes from its Gemini model is icing on the cake.

However, another division is benefiting from the massive AI spending spree: Google Cloud. Google Cloud is Alphabet's cloud computing division, providing the computing power necessary to train and run AI models. Because Google Cloud's clients rent this computing power, it provides a nice income stream to use Alphabet's vast computing resources. In Q4, Google Cloud's revenue rose 30% to $12 billion. While this pales in comparison to Alphabet's $72.5 billion in ad revenue, it provides some growth to Alphabet and is a segment to keep an eye on.

Alphabet is still a dominant AI company with strong product offerings in multiple fields. However, despite the company growing revenue and earnings per share (EPS) at a 12% and 31% pace, respectively, in Q4, investors still consider it a below-average stock.

The stock looks cheap for the growth it's putting up

From a valuation perspective, Alphabet's stock looks dirt cheap. At 21 times trailing earnings and 19 times forward earnings, Alphabet's stock has reached valuation levels it hasn't touched in some time.

GOOGL PE Ratio data by YCharts.

Now, if we compare these prices to the broader market, we'll get an idea of how cheap Alphabet's stock is. The S&P 500 trades for 24 times trailing earnings and 22 times forward earnings, so Alphabet has quite the discount to the broader market. If we compare Alphabet to more of its peers in the tech-heavy Nasdaq-100 index, the gap becomes even starker, as it trades for 32 times trailing earnings and 26 times forward earnings.

This is quite the discrepancy between a company as dominant as Alphabet and these indexes, and it makes Alphabet a screaming buy at its current price point. Wall Street analysts project it will be able to provide double-digit growth this year and the next, so assuming their projections prove correct, investors don't need to worry about Alphabet shrinking to low-growth levels.

Bargains like this rarely come around, but investors need to pounce on them when they do, as they won't last long.