The Nasdaq is officially in correction territory, with the Nasdaq-100 index down by more than 12% from its recent high. A big driver of this has been the "Magnificent Seven" stocks, many of which are down by 20%, or much more, in just a few weeks.

To be fair, there's a solid case to be made that some of the megacap technology stocks are still a bit on the expensive side, even after the recent declines. But one that looks especially attractive right now is Google parent company Alphabet (GOOGL -1.30%) (GOOG -1.29%), which is down by about 20% from its all-time high reached just over a month ago.

Alphabet's recent results are strong

Alphabet's latest results show strong momentum throughout its business. Fourth-quarter revenue grew 12% year over year, and earnings per share grew by 31%. Within the business, YouTube revenue was higher than expected, and traffic acquisition costs were lower than Wall Street had been looking for.

The Google Services segment, which includes Search, YouTube, Chrome, Gmail, and most other consumer-facing parts of the business, saw revenue grow at a double-digit pace.

While both sides of the Google business are performing well, Google Cloud is the standout. It grew revenue 30% year over year in the fourth quarter, but could still have tremendous potential ahead of it. The global cloud services market is expected to grow from about $770 billion in 2024 to almost $2.7 trillion by 2032, so even if Google Cloud simply maintains its market share, this high-margin business could get much larger.

Not only did Alphabet produce just over $100 billion in operating income in 2024, but the company also has about $73 billion in net cash on its balance sheet. Alphabet's cash flow has become consistent to the point where management recently started paying dividends, and while the payout is small for the time being, it could get much larger in the future.

Why is the stock falling?

To be fair, Alphabet isn't down for no reason at all. There are some legitimate concerns on both sides of its business. On the Google Services side, which generally relies on advertising revenue, it's important to point out that in a recession, advertisers would likely pump the brakes on spending. This happened in the 2022 slowdown, as well as in other periods of economic turbulence.

There's also news that the Justice Department is seeking to break up Google, with the department's attorneys recently asking the company to sell its Chrome browser business.

Finally, there are concerns about the massive artificial intelligence (AI) spending Alphabet is doing and whether it will pay off. The company is planning for $75 billion in capital spending this year, roughly three-fourths of its net income over the past four quarters, so investors are understandably concerned about whether the company will get a solid return on this expense.

The bottom line

After the recent decline, Alphabet trades for about 20 times trailing-12-month earnings, the lowest level since early 2023, despite generally strong business results. And if you back out Alphabet's more than $73 billion in net cash, the valuation is even more attractive.

While there are certainly some valid concerns surrounding AI spending and how Alphabet's core ad-driven business would fare in a recession, the bottom line is that Alphabet looks like an absolute bargain at its current price. The stock could certainly be volatile in the near term as the current uncertainty plays out, but for long-term investors, this looks like an attractive entry point.