Mountain View, California-based Alphabet Inc. (GOOGL) is a multinational technology conglomerate holding company offering various products and platforms. With a market cap of $2.5 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 leader in artificial intelligence (AI) for years, utilizing AI as a key component of Google's search algorithm.
Despite its notable strength, GOOGL shares touched their 52-week high of $212.22 in the last trading session. Shares of Alphabet gained 22.8% over the past three months, outpacing the Invesco NASDAQ Internet ETF’s (PNQI) 10.8% returns during the same time frame.
In the longer term, shares of Alphabet rose 11.8% on a YTD basis and climbed 30% over the past 52 weeks, underperforming PNQI’s YTD gains of 16.2% and a solid 33.2% return over the last year.
To confirm the bullish trend, Alphabet is trading above its 50-day moving average since mid-May. The stock has been trading above its 200-day moving average since early June, with slight fluctuations.
Google's underperformance stems from intensifying AI competition from startups like OpenAI's ChatGPT and regulatory challenges, including a potential breakup that could force the sale of Chrome, as the company tries to maintain dominance in search with its new AI features. Additionally, Alphabet faces stiff competition from companies like Apple Inc. (AAPL) and Garmin Ltd. (GRMN) in the smartphone and wearable device markets.
On Jul. 23, GOOGL shares closed down marginally after reporting its Q2 results. Its EPS of $2.31 topped Wall Street expectations of $2.15. The company’s revenue was $96.4 billion, topping Wall Street forecasts of $79.5 billion.
In the competitive arena of internet content & information, Meta Platforms, Inc. (META) has taken the lead over Alphabet, showing resilience with a 28.3% uptick on a YTD basis and a solid 45.3% gain over the past 52 weeks.
Wall Street analysts are bullish on GOOGL’s prospects. The stock has a consensus “Strong Buy” rating from the 54 analysts covering it, and the mean price target of $220.43 suggests a potential upside of 4.2% from current price levels.
