With a staggering market cap of $2 trillion, Alphabet Inc. (GOOG), the parent company of Google, needs little introduction. Headquartered in California, Alphabet is globally renowned for its flagship products like Gmail, Google Maps, and Google Photos, which have become integral to everyday life.
Companies valued at $200 billion or more are generally labeled as "mega-cap stocks,” and Alphabet not only fits this category but surpasses it by a wide margin, boasting a market cap well above this threshold. Alphabet has established itself as a global tech powerhouse, recognized for its innovation and market leadership.
Despite its grand reputation, the mega-cap stock currently trades 18.1% below its 52-week high of $193.31, which it hit on Jul. 10. GOOG stock has dropped 10.4% over the past three months, lagging behind the broader Invesco NASDAQ Internet ETF’s (PNQI) 2.5% gain over the same time frame.
Over the longer term, GOOG is up 12.4% on a YTD basis and has climbed 15.2% over the past 52 weeks. In comparison, the PNQI returned 14.4% in 2024 and 27.5% over the past year.
The stock has traded below its 200-day moving average since mid-July and under its 50-day moving average since early September, indicating a bearish trend.
Alphabet's recent price action has been impacted by concerns over increasing competition in the search market, particularly from AI-driven companies like OpenAI, which have raised questions about its market dominance.
Additionally, investor worries about Alphabet's significant spending on AI infrastructure have sparked fears about profitability and cost management. Broader economic concerns, including uncertainties about the global economy, have also weighed on the stock, contributing to its decline.
Moreover, the company reported its Q2 earnings on Jul. 23, beating Wall Street’s expectations for revenue and EPS. However, the stock declined by over 5% in the next trading session, driven by concerns over spending related to Alphabet's significant investments in AI.
To emphasize the stock’s outperformance, its rival Pinterest, Inc. (PINS) has underperformed GOOG. Shares of PINS have plunged 22.1% on a YTD basis but have soared 9.7% over the past year, trailing GOOG during both these periods.
Despite GOOG’s underwhelming price action compared to the broader internet industry, analysts are highly bullish on the stock. Among the 45 analysts covering the stock, there is a consensus rating of “Strong Buy,” and the mean price target of $202.09 reflects a 21.6% premium from current price levels.
On the date of publication, Kritika Sarmah 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.
