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Alphabet Inc. (GOOGL) Shows Bullish Momentum and Undervaluation: Strong Buy Potential

StockInvest.us, 3 weeks ago

Google Technical Analysis

Alphabet Inc. (GOOGL) closed at $172.50 on May 31, 2024, reflecting a modest gain of 0.23%. The stock oscillated between a daily low of $169.44 and a high of $173.06. The technical indicators present a predominantly bullish outlook. The Relative Strength Index (RSI14) stands at 59, suggesting neither overbought nor oversold conditions, but closer to the upper band indicating potential for upward momentum. The stock is trading above both its 50-day moving average of $162.38 and its 200-day moving average of $143.25, indicating a strong upward trend over the medium to long term. The Moving Average Convergence Divergence (MACD) at 5.26 further reinforces the bullish momentum with a positive signal.

In terms of volatility, the Average True Range (ATR) at 2.01 signifies moderate price fluctuations, suitable for risk-averse investors. Immediate support is identified at $171.95, with resistance closely following at $172.51. The stock's close price near resistance suggests a potential breakout if the upward trend continues.

Fundamental Analysis

Alphabet Inc. has a significant market capitalization of $2.14 trillion, demonstrating its dominance in the tech sector. Despite a minor issue with its AI search tool, the company's fundamentals remain robust, as indicated by the strength of its Google Services segment marked by innovations such as Minimized Custom Tabs for Google Chrome. The company's focus on AI, cloud, and search segments underpins its growth trajectory.

With an EPS of 6.52 and a P/E ratio of 26.46, Alphabet remains reasonably valued in comparison to its growth and sector peers. The Discounted Cash Flow (DCF) calculation values the stock at approximately $190.83, suggesting that the current price of $172.50 is below its intrinsic value, offering potential upside.

Google Analyst sentiment remains highly positive with 1 strong buy, 33 buy, 5 hold, and no sell recommendations. The target price range varies widely, yet the consensus target is around $149.68, which appears conservative considering the current trading price and intrinsic valuation.

Short-term Prediction

For the next trading day, June 3, 2024, Alphabet's stock is likely to test the immediate resistance at $172.51. Given the current technical indicators and recent momentum, a slight rise beyond this resistance is plausible, potentially targeting the year high of $178.77 if positive sentiment continues.

Across the upcoming week, market dynamics will likely drive Alphabet towards consolidation around the $170-$175 range unless significant news or earnings leaks surface, influencing volatility. The stock could hover near its resistance level, awaiting a clear breakout or retracement signal. Despite occasional setbacks, such as the recent AI tool issue, the company's innovative track keeps it in a favorable position for sustained growth. The stock's undervaluation based on DCF analysis and strong market position makes it an attractive candidate for long-term investors seeking stability and capital appreciation.

Overall Evaluation

Given the technical strength, solid market fundamentals, and positive analyst sentiment, Alphabet Inc. (GOOGL) is evaluated as a Buy candidate. The bullish technical indicators, undervaluation based on intrinsic metrics, and substantial growth potential in high-margin sectors such as AI and cloud computing underscore this evaluation. While short-term volatility remains, the long-term outlook supports the stock's potential to deliver appreciable returns.

Check full Google forecast and analysis here.