(Bloomberg) -- Major technology and internet stocks have regained investor favor this year, and no company is ticking more boxes for bulls than Alphabet Inc.

Not only does the Google owner offer the strong cash flow and growth characteristics sought by investors amid rising economic uncertainty, it’s the only one of the five biggest technology firms by market value priced at a discount to the Nasdaq 100 Index.

Despite losing ground this week as easing fears about the banking system cooled high demand for megacaps, Alphabet’s shares are up 12% in March, compared with a 7.5% gain for the tech-heavy benchmark. The rally has added more than $130 billion to Alphabet’s market value and put the stock on track for its biggest monthly gain in almost two years.

The stock fell 1% on Thursday.

“Of the megacaps, Alphabet is the only one that has growth above 10%, that has a valuation that’s palpable, and which has the opportunity for multiple expansion,” said David Wagner, portfolio manager at Aptus Capital Advisors, who has been reducing his exposure to big tech but remains bullish on Alphabet.

The stock trades at about 17 times expected profits over the next 12 months, compared with 24 times for the Nasdaq 100 and Alphabet’s average over the past decade of 20. The valuation makes it a relative bargain among tech heavyweights. Apple Inc., Microsoft Corp., and Nvidia Corp. all trade at premiums to historical averages and the Nasdaq 100. While Amazon.com Inc. is cheap relative to its long-term average, its multiple of about 35 dwarfs that of the benchmark.

Alphabet shares tumbled 39% last year amid a pullback in spending on digital advertising and a broad selloff in tech stocks as the Federal Reserve aggressively raised interest rates to combat inflation. However, in recent months analysts have been raising revenue estimates for 2023 and growth is now expected to rebound to 18% from 10% in 2022.

Artificial Intelligence

“With Alphabet, you not only get the growth in the business, but have potential for some valuation expansion as more clarity is reached on long-term questions, like antitrust actions,” said Patrick Burton, a portfolio manager at Winslow Capital Management.

One issue that’s dogged Alphabet this year is its standing in the race to employ artificial intelligence, which has driven a frenzy of investor interest. Concerns about the competency of Bard, Alphabet’s ChatGPT rival, caused the stock to tumble in February amid fears its market share in the lucrative search advertising business was at risk.

Google recently granted access to Bard and both Bloomberg Intelligence and Bank of America Corp. analysts wrote that the launch can help ease concerns about the perceived lead of Microsoft, which uses ChatGPT technology.

“The AI story has only just started, and since Alphabet trades at a discount, it is harder to say that Microsoft or Apple have the same potential for upside,” said Winslow Capital’s Burton.

Tech Chart of the Day

The Nasdaq 100 Index entered a bull market on Wednesday with a 1.9% advance that has the tech-heavy gauge up just over 20% from a December closing low. Big Tech has been a large contributor to the index’s advance, with major components Nvidia, Meta Platforms Inc. and Tesla Inc. the biggest percentage gainers of 2023. In a measure of how top-heavy the rally has been, an equal-weighted version of the index is up only 13% over the same period, as of its latest close.

Top Tech Stories

• Alibaba Group Holding Ltd. will consider gradually giving up control of some of its main businesses, after completing a major overhaul to create six new companies that may debut on public markets.
• Microsoft Corp. is selling advertising in responses given by its Bing chat search engine, highlighting a potential revenue model for an artificial intelligence tool the company says has attracted 100 million average daily users.
• A prominent tech ethics group plans to file a complaint with the US Federal Trade Commission urging the regulator to halt further commercial deployment of new generations of artificial intelligence technology that powers the popular OpenAI Inc. tool ChatGPT.
• Sony Group Corp. is projected to sell fewer than 300,000 PlayStation VR2 headsets in its first weeks on the market, a slow start for company efforts to take a leading role in development of the metaverse.
• South Korea’s parliament easily approved a bill Thursday to boost the country’s powerhouse semiconductor industry by giving firms tax breaks to spur investments.
• Netflix Inc. is working to bring its nascent video-game service to television sets for the first time, moving beyond smartphones and tablets in a sign of its growing ambitions.
• Nick Clegg, head of global affairs for Meta Platforms Inc., took to the metaverse on Wednesday to insist that the future of computing will take place on that still not-quite-yet-defined virtual world.

--With assistance from Subrat Patnaik and Jeran Wittenstein.

(Updates to market open.)

©2023 Bloomberg L.P.