The Smartest Growth Stock to Buy With $3,000 Right Now

It has been a rough three-month stretch for Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) shareholders. Not only has marketwide weakness taken a toll on the stock, but what little hope was left that the company wouldn't be forced to divest itself of its Chrome web browser is seemingly slipping away. All told, shares of Google's parent are down 20% from their early February peak even after Thursday's post-earnings bounce.

If you've got an extra $3,000 you'd like to invest during this market dip, though, the stock's still certainly worth considering. While there's no denying Alphabet is a stronger company with Chrome than without it, the market's worries that it can't thrive without its home-grown browser are a bit overblown. That spells opportunity for you.

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Chrome is center stage right now

Don't misunderstand. Alphabet would really, really like to hold onto its in-house browser. Numbers from Statcounter indicate that Chrome's share of the global browser market stands at a solid 66%. Given that Google is Chrome's default search engine, not only does this mean most of the world's internet users are steered toward Google, but Chrome itself provides Google with information -- through third-party "cookies" -- that helps the search engine display more relevant ads to individual users.

More relevant ads, of course, mean better returns on marketing spending for advertisers, and more revenue for the search engine that displays those ads. That's why Alphabet has been fighting to hold onto Chrome even as the Department of Justice has pushed in its antitrust lawsuit for Alphabet to divest it. The DOJ argues that Google is operating a monopoly ... which in many regards, it is.

To say that Google's search business is wholly dependent on outright ownership of Chrome, however, isn't entirely accurate.

Oh, owning the browser helps -- to be sure. However, Alphabet has seemingly been preparing for the sale of Chrome for some time now. Although it is not nearly as powerful as third-party cookies, the first-party web cookie tech that Google's been refining since early last year is promising as a tool for providing detailed marketing data about particular individuals. These first-party cookies also work with any web browser -- not just Chrome. In this vein, investors should be encouraged that Google still handles nearly 90% of the world's web queries (again according to Statcounter), a bunch of which obviously aren't being made using a Chrome browser.

It would also be short-sighted to imagine that Alphabet can't figure out new and better ways of offsetting whatever impact the loss of Chrome might make. Remember, Google became one of the world's biggest and most powerful companies with little more than an idea and the technological wherewithal to make it happen.

By the way, the company's also moving toward using its AI-powered, chat-based assistant Gemini as an advertising platform that's not only browser-agnostic, but offered as a standalone app. Indeed, its artificial intelligence offering was a big reason the technology giant was able to top analysts' first-quarter earnings per share estimate of $2.01 with an actual profit of $2.81 per share.

An Alphabet without Chrome

Just for the sake of argument, though, let's say shedding Chrome crimps Google's advertising revenue by a hefty 30% (an extremely pessimistic prospect). What would the actual net impact be?

Ads appearing adjacent to Google's search results are Alphabet's biggest source of revenue. The company racked up $198 billion worth of such sales in 2024 -- 56% of its total top line of $350 billion. At the risk of oversimplifying how some of Alphabet's operations feed into and fuel others, a 30% hit to its search ad business would dial back this figure to something in the ballpark of $140 billion. All other things being equal, that sans-Chrome scenario would drive 2024's top line of $350 billion down to something close to $290 billion. Yikes.

Just bear in mind that everything else Alphabet is doing accounts for nearly half of its revenue, and most of those other units have been growing at least as quickly as the company's search ad business. Take YouTube as an example. Its fourth-quarter ad revenue jumped nearly 14% year over year, while cloud computing service sales soared 30%. YouTube's recently reported Q1 ad sales improved by about the same 10% that its search-based advertising did, while Google Cloud -- now the company's second-biggest operating unit (as measured by revenue) -- saw its top line grow by another 28% year over year.

Data source: Alphabet Inc. Chart by author. Figures are in millions.

Then there's the stuff that's not yet showing up in a big way in the income statement (other than as expenses). These include Alphabet's "other bets" segment, which currently includes an impressive quantum computing processor, the self-driving taxi project Waymo, and an artificial intelligence-powered drug discovery platform called Isomorphic, just to name a few.

Many of these experimental efforts may never lead to commercialized products. Enough of them eventually will, though. Precedence Research believes the global robotaxi market will grow at an annualized pace of 60% through 2034, for instance, and predicts average yearly growth of 31% for the quantum computing industry across the same timeframe.

More to the point for investors interested in buying Alphabet stock on this dip, but worried about a sale of Chrome, the company has clearly been developing a bunch of other potential profit centers. Even if divesting itself of the browser leads to a worst-case scenario, the company would hardly be in as much trouble as the stock's recent performance would imply.

The analyst community certainly seems to think so, anyway. The vast majority of those who cover it still rate Alphabet as a strong buy, with a consensus price target of $201.83. That's 26% above Thursday's post-earnings-surge price. That alone speaks volumes about the company's prospects.

Volatility ahead no matter what

Just buckle up if you're going to take a swing at this stock.

While the market's broad fears of the fallout from the likely sale of Chrome are overblown, there are plenty of investors who take a different view. That type of discord inspires share price volatility. Most of the financial media is also making much of the prospect of a spinoff, inspiring more worry and more volatility. If Google at some point confirms that it has put Chrome on the chopping block, that news could prompt another wave of heavy, volatile selling.

Just don't panic if that happens. Such a plunge could actually flush out the last of the would-be sellers, leaving the stock at a price that more than reflects the potential fallout from the loss of Chrome's third-party cookie data.

You won't necessarily want to wait for that precise moment to dive in, though, since there's no guarantee a sizable stumble for the stock will be the outcome. It's just as possible that nothing meaningful will happen if the company announces what many investors already believe is inevitable. All we know right now is that this stock's pullback from its February peak underestimates Alphabet's future prospects even if the worst-case scenario comes to pass. Thursday's first-quarter earnings beat says as much.

In other words, don't overthink things here.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.