After hitting an all-time high in early July, Google stock swooned. But GOOGL stock clawed back above its 200-day moving average and now has neared its 50-day moving average, in a bullish development.
Google Stock Retreats From All-Time High
Meanwhile, Google stock has gained 17% in 2024.
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. As of the market open on Sept. 23, GOOGL stock had climbed eight straight trading sessions.
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 Alphabet stock, of course, remains whether the emergence of generative artificial intelligence will be materially damaging to Google's core internet search business.
Analyst: How New CFO Can Boost Google Stock
Meanwhile, Morgan Stanley analyst Brian Nowak in a report published Sept. 19 said Google stock could get a boost if its new chief financial officer improves transparency. Also, Google should provide quarterly guidance like most big-cap tech companies, Nowak said.
Anat Ashkenazi started as Google's new CFO on July 31.
"Multi-year regulatory cases that could be disruptive to Google's position in the online funnel, gen AI search disruption risk, capex levels and question marks about the incremental return on investment on gen AI spend, and how much operating discipline Google intends to show to protect profits are all weighing on Alphabet stock," Nowak said.
Nowak added that more transparency around YouTube's financials and Workplace revenue as part of Google's cloud computing business would be helpful to Google stock.
"Issuing guidance and delivering a consistency of upward revisions vs the guidance gives investors more confidence (and understanding) in the business operations and corporate operating and communicating philosophy... and can drive multiple expansion and reduce multiple volatility," Nowak said.
Meanwhile, there's positive Google news as well.
Uber Technologies and Google's Waymo business announced an expansion of their existing partnership that will deliver autonomous ride-hailing vehicles to Austin and Atlanta by early 2025.
And, YouTube announced artificial intelligence features for creators on its Shorts platform using tools from Google's DeepMind video generation model.
'DoubleClick' Antitrust Case Started Sept. 9
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. In a worst-case scenario, the Apple search deal could be scuttled, an analysts says.
Still, Google will likely appeal.
Spotting an opening, Yelp has sued Google, charging it abused its internet search monopoly to control local-search and local-search-advertising markets.
Meanwhile, another government anti-trust lawsuit versus Google started 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.
A decision in the ad tech trial is likely by the end of 2024. The antitrust cases versus Google are likely to move forward in either a Harris or Trump administration.
Lower Valuation Of GOOGL Stock
Some analysts say Google stock could be in trading zone until the second antitrust trial concludes and a judge rules on the case.
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.
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.
Google Stock: AI Search Outlook Key
Headwinds continue. Artificial intelligence startup OpenAI on July 25 said it's testing SearchGPT.
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.
Also, 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 only 50 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 D-plus. 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 78 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 Sept. 23. 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.
