After hitting an all-time high in early July, Google stock dropped for six straight weeks. But Alphabet stock found support at its 200-day moving average, a key technical level.
On Aug. 19 Google celebrated its 20th anniversary as a public company. Alphabet stock holds a market valuation of over $970 billion.
With investors looking for possible catalysts for Alphabet stock, cloud computing leader Thomas Kurian will take part in the Goldman Sachs 2024 Communacopia Technology Conference on Sept. 10.
Also, Google stock has gained 18.5% in 2024 as of the market open on Aug. 26. Google stock hit a new all-time high of 191.75 on July 10. But Alphabet stock pulled back sharply along with most the Magnificent Seven amid a market rotation out of the technology sector and artificial intelligence plays.
Based on recent trading, Alphabet stock may be consolidating. Further, some analysts point to lower trading multiples for GOOGL stock.
However, IBD doesn't put much weight on P/E ratios and other valuation metrics. On the other hand, here are some time-tested trading rules.
Google Stock: DoJ Wins Anti-Trust Case
Amid the 2024 gain of Google stock so far, whether the internet giant is a buy depends on fundamental and technical factors as well as each investor's own goals, strategy and risk tolerance.
The biggest overhang of Google stock, of course, remains whether the emergence of generative artificial intelligence will be materially damaging to Google's core internet search business.
Meanwhile, a federal judge on Aug. 5 ruled that Google has violated antitrust laws by engaging in unfair business tactics to dominate the internet search advertising market. Alphabet's $20 billion in annual payments to Apple, which make Google the default search engine on iPhones, were a central part of the government's case.
Further, a second phase of the trial must now take place to determine what remedies the federal court will order. Google will likely appeal.
'DoubleClick' Advertising Case Starts Sept. 9
Meanwhile, another government anti-trust lawsuit versus Google is slated to start Sept. 9. Some analysts call it the "DoubleClick trial." In 2008, Google acquired a leading digital advertising firm DoubleClick for $3.1 billion.
The DoJ claims Google's dominance of the digital ad market has damaged advertisers and content creators. The advertising anti-trust case will take place at the U.S. District Court for the Eastern District of Virginia with federal judge Leonie Brinkema presiding.
Alphabet delivered mixed second quarter financial results for Google stock, with the internet search advertising business and cloud computing unit topping expectations but YouTube missing.
Google's capital spending surged 91% to $13.18 billion in the quarter. Alphabet says it's playing the long game with artificial intelligence.
"The risk of underinvesting is dramatically greater than the risk of overinvesting," said Google Chief Executive Sundar Pichai on Alphabet's Q2 earnings call.
Will New CFO Increase Transparency?
Meanwhile, a new chief financial officer, Anat Ashkenazi, started July 31. For Google stock, her views on "guidance, capital allocation and transparency" will be areas to watch, said a Baird report.
For example, improved transparency over YouTube's profitability and business trends could boost Google stock, some analysts say.
Meanwhile, investors will likely have to wait until Google's Q3 earnings call to get Ashkenazi's views on business operating trends. Google's former CFO, Ruth Porat, ramped up buybacks of Google stock. Also, Alphabet doesn't provide specific quarterly guidance.
Ashkenazi has held diverse financial, strategy, and operations roles at pharmaceutical giant Eli Lilly for over 23 years, including serving as CFO for the past three years.
Google Stock: AI Search Outlook Key
Headwinds continue. Artificial intelligence startup OpenAI on July 25 said it's testing SearchGPT. "While we don't see a significant direct competitive search risk for Google on mobile given Google's tech and distribution advantages, we do see some longer-term risk for Alphabet from a potential OpenAl and Apple search partnership," said Bank of America analyst Justin Post in a report.
Meanwhile, amid the emergence of generative AI, there's debate over whether Google stands out as a tech industry leader or lags startup OpenAI. Also, Google stock is among many AI stocks to watch.
In addition, Google aims to counter Microsoft's investment in OpenAI by making its own generative AI tools available to software developers. Google's large language model (LLM) is called Gemini.
The impact of generative AI on Google's core internet search advertising business remains a key issue. Google has embedded its Gemini AI model tools and chatbot AI technology into its search engine.
Google Ramps Up 'AI Overviews'
What's more, Google began widely deploying AI Overviews in the U.S. in mid May, with conversational summaries topping links for many search queries. Also, Google plans to expand AI Overview's availability globally to 1 billion users by year end.
Analysts say Google stock is getting a boost from the Performance Max advertising platform. It automates buying across YouTube, internet search, display, Gmail, maps and other applications. Performance Max lets advertisers manage campaigns across all Google ad inventory. Advertisers that use the tools convert more shoppers into buyers, Google says.
In a major reversal, Google plans to keep consumer tracking technology known as "cookies" in Chrome browser. Google will present Chrome users with a prompt to decide whether to turn cookies on or off. Google has taken steps to eliminate cookies for four years, a project called Privacy Sandbox. Digital-advertising companies and regulators worried that Google's influence would be even greater by getting rid of cookies.
Alphabet Stock: Cloud Computing
Aside from Google's core internet search advertising business, Wall Street analysts view growth at YouTube and cloud computing as key. Another question is the performance of Google's hardware business, where it's battling Apple in smartphones.
Google aims to slow down the growth of TikTok with its own short video platform. How much money Google generates from YouTube Shorts is a key issue for 2024, analysts say. YouTube Shorts now generates roughly 70 billion daily views.
In cloud computing, Google is still the third biggest service provider, behind Amazon.com and Microsoft. Like Amazon Web Services and Microsoft' Azure business, Google's cloud unit has upped capital spending targeting the new opportunity in generative AI.
Google's 2022 acquisition of cybersecurity firm Mandiant for $5.4 billion seems to be paying dividends. Mandiant is part of Google's cloud-based cybersecurity services.
Further, Alphabet's money-losing "Other Bets" and Moonshots are company assets that investors should monitor for new developments, according to an IBD report. While the roll-out of robo-taxi services by Waymo has lagged expectations, it's still viewed as a leader in autonomous vehicles.
Google Stock: Is It A Buy Or Sell Now?
Alphabet stock has turned in good and bad years recently. Shares jumped 65% in 2021 but in 2022 dropped 39%. Despite mounting competition in AI and internet search, Alphabet advanced 58% in 2023.
Also, the Relative Strength Rating of Google stock currently stands at 67 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better. The relative strength line has tumbled.
Google stock holds an Accumulation/Distribution Rating of E. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, shares hold an IBD Composite Rating of 76 out of a best possible 99. The best growth stocks have a Composite Rating of 90 or better.
On MarketSurge, Google stock is not in a buy zone as of Aug. 21. Alphabet stock needs to form a proper base to be actionable. Long-time holders could take profits.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
