Mountain View, California-based Alphabet Inc. (GOOGL) is a multinational technology conglomerate holding company offering various products and platforms. With a market cap of $2 trillion, GOOGL provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and GOOGL definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the internet content & information industry. The Internet media giant has been a pioneer in artificial intelligence (AI) for years, as this groundbreaking technology is a core driver of Google's search algorithm.
Despite its notable strengths, Alphabet slipped 14.8% from its 52-week high of $191.75, achieved on Jul. 10. Shares of Alphabet dipped 5.1% over the past three months, trailing significantly behind the S&P 500 Index’s ($SPX) robust 7.9% surge during the same time frame.
In the longer term, shares of Alphabet rose 17% on a YTD basis and climbed 21.4% over the past 52 weeks, underperforming SPX’s YTD gains of 18.4% and a solid 25.6% return over the last year.
To confirm the bearish trend, Alphabet has traded below its 50-day moving average since mid-July. However, the stock has been trading above its 200-day moving average over the past year.
GOOGL’s overall performance can be attributed to the regulatory challenges and potential threats from emerging technologies like OpenAI's SearchGPT. Additionally, it continued to witness sluggishness in Google Network ads. The company may have some uncertainties surrounding its business practices due to recent antitrust rulings, but it is unlikely that Google's virtual monopoly over search will be easily challenged in the near future.
On Jul. 23, GOOGL reported its Q2 earnings results, and its shares fell more than 3% in the following trading session after it reported higher-than-expected Q2 capital spending. Its EPS of $1.89 surpassed Wall Street's expectations of $1.85. The company’s revenue was $84.7 billion, beating forecasts of $70.6 billion.
In the competitive arena of internet content & information, Meta Platforms, Inc. (META) has taken the lead over Alphabet, showing resilience with a 47.3% uptick on a YTD basis and a solid 74.9% gain over the past 52 weeks.
Wall Street analysts are highly bullish on Alphabet’s prospects. The stock has a consensus “Strong Buy” rating from the 44 analysts covering it, and the mean price target of $204.71 suggests a potential upside of 25.3% from current price levels.
On the date of publication, Neha Panjwani 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.
