Alphabet Inc. Shows Bearish Trend Despite Upside Potential; Technical Indicators Signal Caution

Technical Analysis

Alphabet Inc. (GOOGL) traded with a notable gain, closing at $170.28, up by 1.06% on February 28, 2025. The share price is batting below the 50-Day and 200-Day Moving Averages of $190.97 and $175.79, indicating a bearish trend. The Relative Strength Index (RSI) stands at 24, which signals the stock is oversold, potentially priming it for a rebound in the near term. The Moving Average Convergence Divergence (MACD) shows a negative figure of -6.36, further affirming bearish momentum. With the Average True Range (ATR) indicating a volatility of $2.76, traders can anticipate swings within this range. Key support is seen at $168.95, while resistance looms at $191.33. Trading volume of 44.82 million shares significantly exceeded the average volume of 29.28 million, suggesting heightened trading interest.

Fundamental Analysis

Alphabet's current market capitalization stands robust at $2.09 trillion. With an EPS (TTM) of $8.04 and a P/E ratio of 21.18, the stock trades at a moderate valuation relative to the industry. Analysts' consensus on the firm's price target ranges between $170 to $225, with a median target of $205, which substantiates potential upside. The discounted cash flow (DCF) valuation of approximately $262.05 suggests that Alphabet may be intrinsically undervalued at its current price. Upcoming earnings announcement on April 24, 2025, and potential dividend payment on March 17, 2025, are important dates for investors. The dividend yield, based on TTM, stands modest at 0.35%.

Short-term Prediction

For the next trading day, March 3, 2025, a minor bounce is possible considering the oversold RSI condition. If the stock breaches current support, it may test lower levels near the stop-loss of $159.86. In the upcoming week, a gradual recovery might be plausible if volume persists and bearish sentiment wanes, potentially moving towards the resistance level.

Long-term Investment Potential

Alphabet's involvement in AI and cloud computing, as noted in recent news involving Google's strategic realignment and capital expenditure plans, bolsters long-term growth potential. Investments in AI infrastructure, fueled by strategic partnerships and increased spending, position Alphabet favorably for sustained revenue and earnings growth. The DCF supports a long-term bullish scenario, projecting intrinsic value significantly above current levels.

Overall Evaluation

The stock is categorized as a 'Hold' candidate. Technical indicators suggest some short-term downside risk, though underlying fundamentals are strong, with long-term prospects tied to AI and cloud growth potential. Continued monitoring of financial releases and strategic developments is advised to reassess positioning.