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.
