With a market cap of $2.1 trillion, Mountain View, California-based Alphabet Inc. (GOOGL) has evolved beyond its roots as a search engine provider into cloud computing, digital advertising, autonomous vehicles, and healthcare. The company dominates the online search market, with over 94% market share, while also expanding its presence in cloud services through Google Cloud and Google Workspace.
Companies valued over $200 billion are generally considered “mega-cap” stocks and Alphabet fits this criterion perfectly, exceeding the mark. Alphabet is a holding company that operates through Google, encompassing core internet services, and Other Bets, which includes innovative ventures like Waymo, Verily, and X.
The internet search leader has seen a 17.3% decline from its 52-week high of $207.05, reached on Feb. 4. Over the past three months, its shares have risen 1.2%, outperforming the broader Dow Jones Industrials Average's ($DOWI) 1.9% decline during the same period.
Longer term, shares of Alphabet have soared 23.4% over the past 52 weeks, compared to the Dow Jones’ 12.6% rise over the same time frame. However, GOOGL is down 9.5% on a YTD basis, lagging behind DOWI's 3.1% return.
GOOGL had been in a bullish trend last year, trading mostly above its 50-day and 200-day moving averages, but recently, it has dipped below both indicators,
Alphabet shares tumbled 7.3% following its Q4 earnings release on Feb. 4 due to Google Cloud's revenue growth slowing to 30%, missing the analyst consensus. Investors were also wary of Alphabet’s aggressive AI infrastructure spending, with capital expenditures rising to $75 billion. Additionally, Google's Network ad business revenue declined by 4% to $8 billion, raising concerns about advertising weakness. Despite total revenue growing 12% to $96.5 billion and adjusted EPS rising 31% to $2.15, the market reacted negatively to slower cloud growth and rising costs.
In addition, GOOGL has underperformed its rival, Meta Platforms, Inc. (META), with META experiencing a 14.9% YTD rise and a 38.1% surge over the past 52 weeks.
However, analysts are bullish about GOOGL's prospects, given its outperformance compared to the Dow Jones over the past year. With a consensus "Strong Buy" rating from 50 analysts, the mean price target of $218.75 indicates a 28.6% premium to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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