diff --git a/packages/grafana-ui/src/components/Select/SelectBase.tsx b/packages/grafana-ui/src/components/Select/SelectBase.tsx
index 73853d84a36..995098d7448 100644
--- a/packages/grafana-ui/src/components/Select/SelectBase.tsx
+++ b/packages/grafana-ui/src/components/Select/SelectBase.tsx
@@ -186,7 +186,7 @@ export function SelectBase<T, Rest = {}>({
         const selectableValue = findSelectedValue(v.value ?? v, options);
         // If the select allows custom values there likely won't be a selectableValue in options
         // so we must return a new selectableValue
-        if (!allowCustomValue || selectableValue) {
+        if (selectableValue) {
           return selectableValue;
         }
         return typeof v === 'string' ? toOption(v) : v;
diff --git a/public/app/features/alerting/unified/AlertGroups.test.tsx b/public/app/features/alerting/unified/AlertGroups.test.tsx
index 23a848d50f0..45066ea5de7 100644
--- a/public/app/features/alerting/unified/AlertGroups.test.tsx
+++ b/public/app/features/alerting/unified/AlertGroups.test.tsx
@@ -189,6 +189,8 @@ describe('AlertGroups', () => {
     renderAmNotifications();
     await waitForElementToBeRemoved(ui.loadingIndicator.query());
 
+    // reset the input of the MultiSelect component
+    await user.type(ui.groupByInput.get(), '{backspace}');
     await user.type(ui.groupByInput.get(), 'appName{enter}');
 
     const groups = await ui.group.findAll();