Indeed, just yesterday (8 April) we saw some shares surge on the back of the latest developments in the Middle Eastern war.

But while that may offer some short-term relief to investors, I think it is also a stark reminder of how fragile investor sentiment currently is. Yesterday was a good day in the stock market – but there could be more painful days ahead.

I think now is the perfect time to get ready for a dramatic stock market crash, in fact.

The value of preparation over market timing

That does not mean I necessarily expect a crash soon.

Sure, I see lots of reasons why a dramatic crash could make sense. Oil prices have lately surged. That will probably push up inflation substantially.

Geopolitical tensions are high, shipping rates are all over the place and investors are nervous. None of those factors tend to be positive for the stock market overall.

But markets can and do defy negative circumstances. Conversely, sometimes they struggle even when the economy is strong and businesses are doing well.

That is why it can be a costly mistake to try and time the market.

We know it will crash sooner or later. I also reckon there are good reasons why that could happen soon – but there is no certainty it will. As John Maynard Keynes said, markets can remain irrational longer than you can stay solvent.

My solution?

Instead of trying to time the market, I am getting ready scoop up some potential bargains in the next crash – whenever that turns out to be.

Separating business quality from current share price

In practice, that means I am updating a watch list of companies that I would like to invest in if I could do so at an attractive price.

These are firms I think have great businesses. So, you may wonder, as a long-term investor, why do I not simply buy them now?

The answer is valuation.

Even a great company can make a poor investment if someone pays too much for it.

As stock market crashes can be short-lived, I want to be ready to act when the next one happens. That could happen at any moment, so I see now as the time to keep my list updated.

Here’s a share I have my eye on

One name on my list is Google owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

Its share price has surged 180% over the past five years. At 29 times earnings, it may not look as obviously overpriced as some tech firms.

Still, that price is too high for my tastes. Alphabet faces risks ranging from its massive investment in AI infrastructure not paying back to a weak economy eating into advertisers’ willingness to spend on YouTube ad slots.

Still, the underlying business remains strong.

Google, YouTube and other Alphabet businesses benefit from the company’s tech strength, massive user data and strong brand awareness.

The motive to switch to a different provider is often low. Barriers to switching can be high for Alphabet’s enormous installed base of regular users. That ought to help long-term profitability.

The post I’m getting ready for a dramatic stock market crash appeared first on The Motley Fool UK.

In reality, though, a crash can be terrifying for some share owners, but a terrific opportunity for other investors.

Let me explain why.

When, not if

Just as British people famously love to talk about the weather even with no control over it, some investors love to pontificate on what might happen next in the market despite having no influence over that.

The reality is that nobody knows with certainty when the next stock market crash will be. A lot of time and effort is spent trying to time the market. To my mind it is poorly spent.

While we do not know when the next crash will be, history teaches us that there will be one sooner or later.

That could be tomorrow – or it could be years from now. Either way, I think it pays to be prepared and try to turn a stock market crisis into an investing opportunity.

What a crash really means

One reason people fear a stock market crash is because they are worried it could send the value of their share portfolio plummeting.

That is true – and it can be an alarming thing to experience.

But – and this is a crucial point – that is only the paper value. In other words, the market is providing a constant valuation of their shares but they can ignore it if they choose.

It is like owning a home, boat, coin collection, or anything that has some market value. That value may go up and down while you own it. But until you sell, any loss or gain is just on paper.

Mixing the wheat and the chaff

Some shares go down in a stock market crash and recover only slowly, if at all.

Maybe they were overvalued in a pre-crash bubble. Or perhaps the crash and wider financial shifts have changed their underlying business value.

But as panic grips the market and people start dumping their holdings, sometimes indiscriminately, perfectly good shares can be dramatically marked down in price even though their underlying investment case may not have changed.

That can be an opportunity to scoop up some blue-chip bargains.

Getting ready now

Such opportunities, though, can be short-lived. So it makes sense to be ready.

To that end, I make and update a shopping list of shares I would like to own, if only I could buy them at an attractive enough price.

One name on my list is Google and YouTube owner Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The share has been buffeted at points over the past couple of years by concerns about whether AI will hurt its search business. But that seems like ancient history now, given how the Alphabet stock price has been doing. For now, it remains too high for me to buy.

I do think AI could be a risk to search. But it could be an opportunity too. It may help Alphabet customize its content even more and deepen its already strong customer loyalty.

Alphabet has a proven business model that generates large amounts of cash (though AI expenditure could eat into that).

It owns strong brands, has a massive customer base, and has the technical expertise to try and turn AI to its advantage, in my view.

The post If the stock market crashed tomorrow, what would that mean for investors? appeared first on The Motley Fool UK.

The idea of computers driving cars safely would’ve been science fiction only a few years ago. It is now not only happening, but threatening to be rolled out worldwide and bringing in the kind of productivity increases only seen in once-in-a-generation inventions like the internet, the steam engine, or the printing press. And it might mean certain stocks end up being the best investments going…

Leading the pack

Leading the pack is Waymo, which will be running the trial in London this year. Waymo is a division of Google owner Alphabet (LSE: GOOG) and is already running driverless taxis in cities in America. It aims to be in 20 cities by the end of the year (along with London and Tokyo).

Early signs are promising. The taxis run well, are liked by consumers, and rarely encounter issues like getting stuck or causing accidents. The problem is that they operate under simple road systems that are well-mapped. Rolling the tech out on a larger scale, particularly in rural areas, might be more of a challenge.

The other company to get a foothold is Tesla (NASDAQ: TSLA) which is running a pilot program – albeit still using backup drivers in the car in case of failure. While the Tesla robotaxis seem to be behind in the race, they may have an ace up the sleeve – vertical integration.

The plan is for Full Self Driving – Tesla’s autonomous service which can be used by owners of the vehicles – to reach a point where they can ‘solve’ autonomous driving on all roads and in all conditions. If this ambitious goal is reached then it could be rolled out on a grand scale for taxis, personal cars, and even delivery and public transport vehicles.

Other options?

It will probably not escape notice that these options are huge companies with a lot more going on. Waymo is just 2% of Alphabet’s market cap according to one estimate. The self-driving part of Tesla is more integrated but still a single part of a $1.3trn company. This is a serious disadvantage for those looking for a pure driverless revolution play. Nonetheless, I think both are worth considering.

A third ‘wild card’ option is the Chinese company Baidu. The firm is apparently already running trials in Beijing. The country was much quicker to adopt electronic payments which might suggest it will be quicker to adopt autonomous vehicles too. However, I can’t say I’m interested in investing in Chinese companies, given potential government overreach.

There are other options like LiDAR (a movement detection system) firms, such as Ouster and Hesai Group, that provide part of the vital technology for the vehicles. Another possibility is Kodiak Robotics, a company that specialises in autonomous driving technology for larger vehicles like trucks.

Only time will tell if any of these go on to be once-in-a-generation opportunities. But, I think it’s worthwhile for investors to be aware of them all.

The post Is 2026 a once-in-a-generation opportunity to buy autonomous vehicles growth stocks? appeared first on The Motley Fool UK.

The company outlined plans to increase its artificial intelligence (AI) spending to huge levels in 2026. But what does that mean for the company and the wider stock market?

Outstanding operations

Advertising revenues were up 14% and Cloud sales increased by 48%. And operating income growth was even more impressive, coming in at 22% and 154%, respectively.

Investors used to wonder whether the shift to AI search might threaten Google’s search position. But the Gemini app reached 750m monthly active users, so that answers the question for now.

Everything seems to be going well, but the real number investors were watching was the planned spending for 2026. And CEO Sundar Pichai guided for somewhere between $175bn and $185bn.

It’s a huge number that means a lot for the company and its shareholders. But it also has implications for the wider stock market.

$175bn

For context, $175bn is well above what Meta Platforms expects ($115bn-$135bn) to spend this year. And it’s more than twice Alphabet’s free cash flows for 2025 ($73bn). 

It’s also more cash than the firm has on its balance sheet. So I suspect the company is going to have to finance its spending by taking on debt.

There’s nothing intrinsically wrong with that – it’s probably the right decision if it can get a good return on those investments. But it is risky, especially given the uncertainties around AI profits.

Google Cloud has done well, but there are real questions about where profits are going to come from for the likes of OpenAI and Anthropic. And that makes investing on this scale a big risk.

What it means for the stock market

Alphabet’s big commitment has some serious implications for the wider stock market. It’s a positive sign for the companies that make the equipment that goes into data centres.

Given where those stocks are priced at the moment, a cut in capital expenditures could have seen share prices crash. But demand seems like it’s going to remain strong – at least for another year.

On the other side of the coin, it’s not likely to be good news for software companies that have been under pressure recently. Alphabet’s plan is a clear sign of more AI applications on the way.

A drop-off in data centre spending might have disrupted the competition that’s been threatening some of the biggest names in the industry. But there’s no sign of the pressure letting up yet.

Final Foolish thoughts

My view is that investors could consider buying the stock at today’s prices. If the AI story continues to develop in a positive way, the company should more than justify its current share price.

But I also think that it’s worth looking at some of the beaten-down software stocks to help offset the risk. If – for whatever reason – things don’t go to plan, these businesses stand to benefit.

There’s still a lot of uncertainty around exactly what AI will achieve. But I think investors can look to be smart by playing both sides – and Alphabet is a good stock to consider as part of this strategy.

The post Alphabet’s $175bn bombshell just sent a message to the entire stock market appeared first on The Motley Fool UK.

Don’t try to time the market

Buffett has sat on large piles of cash at points, leading some to think he was trying to wait for a big enough market downturn to spend. But he is smart enough to know that nobody can time the market with total confidence – and he does not try to do so.

Instead, his approach has been to buy individual shares when he thinks they are attractively valued, hold them for the long term, and then sometimes sell them.  

That can look like timing the market because it involves buying shares at what look like cheap prices. Often, a good moment to do so is following a stock market crash.

But buying bargains when they appear is not the same as trying to time the market. Buffett did not pile into dotcom stocks then hope to bail out on a big profit before the market peaked, for example.

Sticking to what you know and understand

In fact, Buffett did not bother buying any dotcom stocks at all back in the heady days of the turn of that era. Nor did he buy leading AI shares before stepping down as chief executive of Berkshire Hathaway at the turn of this year.

There is a simple reason, even before getting onto valuation. Buffett likes to stick to what he understands. He long expressed a belief that he did not have the necessary knowledge to judge whether tech companies had the sort of business characteristics he looked for.

Only years later did he invest in IBM and Apple.

A Buffett-like moat

One tech share he and partner Charlie Munger mused about missing out on was Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

The reason was that, in this case, they felt they did have insights into Google and failed to act on them. Berkshire owned a business that was already splashing a lot of cash buying ads on Google, so Buffett and Munger could have put two and two together to see the wider potential of the Google business.

Alphabet has several characteristics Buffett likes in a stock and one is its ‘moat’. This is how Bhe describes a competitive advantage that keeps rivals at bay.

Google’s moat comprises its huge volume of user data, proprietary technology and a proven money-making model not only through search but other properties like YouTube too.

AI is a risk to Google’s search dominance. It could lead to less searches and therefore less advertising revenue. But it could also present an opportunity for Alphabet, given the company’s huge amounts of organised information that could help it make use of AI itself.

Alphabet has a massive customer base and has proven highly cash generative over time (though AI costs could reduce that).

But, like Buffett, I like to buy into great businesses at attractive prices. The current Alphabet stock price is too high for my tastes, so I will not be investing. 

The post Could we be in a bubble? I’m taking the Warren Buffett approach! appeared first on The Motley Fool UK.

The big question is how much further can this bull run go?

Let’s have a look.

Wall Street gets more bullish

If you follow my writing, you’ll know I don’t always trust institutional analysts. There are some really great ones, and some guys who are really stealing a living.

I say that because I find the consensus opinion on Alphabet really interesting. The consensus was Buy until November 2025 at which point it became a Strong Buy.

To me, however, it was clear that the stock was vastly undervalued relative to its growth potential earlier in the year. Now, in my opinion, there’s much less margin of safety.

Margin of safety diminishes

The margin of safety is the principle of investing with a significant discount between a company’s market price and its intrinsic value.

This gap provides protection against errors in analysis, adverse developments, and market volatility, helping investors minimise the risk of permanent capital loss while preserving long-term returns.

It’s something very successful investors like Warren Buffett have talked about extensively. How the investor defines fair value is up to them, of course.

For me, it’s all about relative valuation, growth, profitability, and the balance sheet.

Today, Alphabet trades around 30.6 times forward earnings — that’s about 30% above the IT sector average and 88% above the communications sector average. The price-to-earnings-to-growth (PEG) ratio is two — 20% above the IT sector average and 57% above the communications sector average.

These metrics suggest an overvaluation. So, why are analysts so bullish?

Well, it’s a quality company with great long-term drivers, including in emerging sectors like self-driving cars and quantum computing.

The market also got quite excited about the idea that Alphabet could sell its ASICs (TPUs) — an application-specific chip — becoming an Nvidia competitor in hardware.

The bottom line

For me, there is limited near-term growth potential. Search — and other Google Services — and Cloud are strong businesses but the stock is priced for these segments to do well.

So, what could that mean for a £20,000 investment in Alphabet this year?

Well, momentum is really hard to forecast and earnings beats could certainly send the stock higher. What’s more, we could have some more great news about the Willow quantum chip or the self-driving cars.

However, the key word here is ‘could’. Unless you’re working at Alphabet, you’re very unlikely to know whether these things could happen before the rest of the market.

Stripping it down to the valuation, I’m suggest Alphabet would do well to maintain its current price. But I do expect more strong operational performance. Putting them together, I’d only expect a modest return on £20,000 over the next year. Maybe £21-22k.

However, I still think the stock is worth considering for the long run. It’s a tech giant with lots of strings to its bow.

The post Prediction: in 2026 the red-hot Alphabet share price could turn £20,000 into… appeared first on The Motley Fool UK.

Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

Here are the latest three picks from our team of experts.

• Alphabet posted its first $100 billion quarter in revenue in the third quarter, with Google Cloud accelerating to 34% growth and AI features reinvigorating Search.
• Alphabet is aiming to convert its $155 billion cloud backlog into revenue while scaling its Gemini AI models across Search, Cloud, and enterprise products.
• Investors should pay attention to AI Mode monetization rates, Waymo’s expansion to 20+ cities, including London and Tokyo, and whether the company’s heavy infrastructure spending weighs on profitability.
• Berkshire Hathaway disclosed a multibillion-dollar stake during this period, a vote of confidence that proved well timed given the stock’s 64% gain for the year as of this writing.
• A U.S. federal judge declined to force a divestiture of Chrome in September, instead ordering Google to end exclusive search distribution deals with device makers like Apple. Separately, the European Commission imposed a nearly $3.5 billion fine over advertising practices. While both cases represent ongoing challenges, investors viewed the U.S. ruling as a relative victory since the company avoided a forced breakup, and shares rose on the news.

The post Just released: the 3 best growth-focused stocks to consider buying in January [PREMIUM PICKS] appeared first on The Motley Fool UK.

The rally reflects a shift in investor sentiment towards the Google owner.

After spending much of 2023 and early 2024 under pressure from artificial intelligence (AI)-related fears and heavy capital spending, Alphabet has reasserted itself as one of the market’s most powerful compounders. Strong advertising growth, improving margins, and renewed confidence in its AI strategy have all played a part.

TPUs, Gemini and more

But there’s been other factors too. The market’s increasingly interested in Alphabet’s ASICs, particularly its in-house tensor processing units (TPUs). These custom chips are designed specifically for AI workloads, allowing Alphabet to train and deploy large models more efficiently and at lower cost than relying solely on third-party GPUs.

While these TPUs are good for margins and security of supply, the market’s also become interested in the notion that Alphabet could sell them. For example, Meta’s reportedly in talks with Alphabet to buy billions of dollars of these TPUs. Is this a big new revenue stream for the company? Maybe.

However, the real focus should be on Alphabet’s core business. Investors had been worried that ChatGPT and the like would destroy the Search business — that hasn’t happened. Meanwhile, Cloud revenue surged 34%, improving diversification and strengthening the group’s overall resilience.

But there’s also Gemini. Gemini 3.0 — Google’s answer to ChatGPT — has made headlines, simply because it’s very good. I only have one AI app on my phone, and it’s Gemini. There’s probably good reason for that. It leads on reasoning and its image generator — Nano Banana — is really impressive.

What’s else has contributed to this rising share price? Well, a more favourable-than-feared resolution to the US Department of Justice case has helped lift sentiment. Developments in quantum computing — notably the Willow chip — have also reminded the market of Alphabet’s long-term optionality.

While commercial quantum applications remain some way off, progress at this level reinforces the company’s reputation for deep, defensible research that few rivals can match. 

And remember, it’s also a robotaxi leader though Waymo.

The valuation

Of course, the last six months of growth is in the past. Now we need to look to the future.

Where will the stock go next? Well, the value play isn’t quite there anymore. It now trades at 29 times forward earnings and with a price-to-earnings-to-growth (PEG) ratio of 1.93. These are both premiums to the information technology sector average — around 15%-20%.

That doesn’t mean this stock’s overvalued however. Each company has its own merits and investors are starting to see Alphabet as a diversified player with significant stickiness is core businesses — eg Search dominance will remain in tact.

As always, there are risks. A recession, for instance, could result in weaker advertising demand, putting short-term pressure on revenues and margins. Regulatory scrutiny also remains a constant backdrop, particularly in the US and Europe, where changes to competition or data rules could affect how Alphabet operates. 

However, I still believe it’s worth considering for the long run. The valuation data doesn’t scream Buy, but it’s a long-term diversified winner.

The post £10,000 invested in Alphabet shares 6 months ago is now worth… appeared first on The Motley Fool UK.

One popular approach is drip-feeding – slowly investing the cash over time to smooth out the ups and downs. But this method of incremental investing comes with a surprising drawback.

Drip-feeding

Firstly, what is drip-feeding? It’s a type of investing – sometimes called ‘pound-cost averaging’ or ‘dollar-cost averaging’ in the US – where a cash sum is invested bit by bit (or drip by drip).

When starting with a pile of cash as big as £20k, drip-feeding a few hundred pounds of it month-by-month can soften the erratic nature of the stock market. The risk of bunging all the dough in just before a sickening crash is removed, for example.

Somewhat counterintuitively, the drip-feeding approach usually leads to lower returns in the long run. A study by the popular index fund provider Vanguard crunched the numbers. Their research shows that investing the full amount all in one go wins out 68% of the time.

The old maxim rings true: ‘Time in the market beats timing the market’. Or, in other words, the best way to invest is to do it for as long as possible. That means buying early, whether it’s a small pile of spare cash or a huge lump sum.

Investors can get the best of both worlds by drip-feeding from savings from the day job. Putting in a little cash each and every month makes it easy to take advantage of stock market blips, even short-lived ones like the ‘Liberation Day’ crash. Any money invested from that March paycheque could have jumped 20% as the markets rebounded.

To buy?

One subject that gets a lot of attention these days is artificial intelligence. While the jury is still out on just how revolutionary this new tech will be, I think it’s worth mulling over AI-related stocks like Alphabet (NASDAQ:GOOG) for a portfolio – whether drip-feeding or lump-sum investing!

The owner of Google and Youtube is lauded as having one of the most robust large language models going in Gemini. On a personal note, this is my preferred AI of choice when I have a burning desire to ask wildly esoteric questions about the Hundred Years War or somesuch.

While AI may be a boon, it also represents a large threat to the company too. With 75% of sales coming from ad revenue from search engines, folks moving to chatbots to ask their questions could be a risk to its core business model.

I think the ups outweigh the downs here though. And the Alphabet finger is in other pies too like self-driving technology Waymo which already has driverless cars running in some US cities.

The stock even trades at a reasonable-sounding 30 times earnings, close to the S&P 500 average. I think it’s worth considering.

And for our passive income goal? A £20k portfolio growing at 10% yearly will pay £8,667 yearly at a 4% drawdown when starting withdrawals in the 26th year.

The post Have a £20,000 lump sum? Here’s how to target a £8,667 yearly passive income appeared first on The Motley Fool UK.

Heading into 2026, the company’s probably in a stronger position than it was 12 months’ ago. But the rising share price seems to be starting to bring out some people’s inner value investor.

The investment equation

On the face of it, Alphabet shares are much less attractive than they were at the start of the year. The price-to-earnings (P/E) ratio the stock trades at has gone from 23 to 30. That doesn’t mean it’s overvalued, but it does mean investors are much more optimistic about the company’s future growth. And that usually makes for a less attractive buying opportunity.

Investors might therefore think the time to buy Alphabet shares has passed. But the company’s in a stronger – in my view, much stronger – position than it was at the start of the year.

Back in January, the firm was facing an antitrust lawsuit for maintaining an illegal monopoly. It had already been found guilty and the question was what the consequences would be. Several investors took the view that not much was going to happen and they’ve been proven right. But that doesn’t mean the risk wasn’t real, or that it shouldn’t have been taken seriously.

For the time being, that threat’s off the table and is a big reason why the stock’s trading higher. There are, however, other potential risks that investors need to think about in 2026.

AI expenses

The investing theme of 2025 has been artificial intelligence (AI) and Alphabet’s been at the centre of it. Strong growth in Google Cloud has been another force pushing the stock higher. Investors however, are starting to wonder about AI profitability. And that raises two separate issues for Alphabet in the context of the leading position it’s been establishing in 2025.

The first is its heavy investment in AI data centres. Some of this has been financed with debt and the stock market’s just starting to wonder whether this is a good idea.

Alphabet isn’t alone in this – Amazon and Microsoft are in a similar position. But other companies facing similar challenges doesn’t make the stock any more attractive.

The second is AI search. Gemini’s taken the lead over ChatGPT, but queries are much more expensive than traditional search and this raises questions about profit margins.

Neither issue is likely to capsize the company heading into 2026. But both are issues that investors need to take seriously in the context of the stock’s current valuation.

Risks and rewards

There are always risks when it comes to investing in businesses and Alphabet’s no exception. The question for investors is whether these are worth the potential rewards. 

At the start of January, I think the stock market was underestimating the potential threat from the firm’s antitrust case. But the company has emerged largely unscathed.

Looking ahead, the next challenge for Alphabet is to turn AI investments into profits. And at a P/E ratio of 29, my view is that there are more attractive AI opportunities to consider.

The post Is Alphabet still one of the best shares to buy heading into 2026? appeared first on The Motley Fool UK.