Sign InAlphabet Inc. shows growth potential despite regulatory challenges
Summary
Alphabet Inc (GOOGL) closed at $135.77 on September 5th, 2023, with a slight change and a price range for the day between $134.58 and $136.42; technical indicators suggest a bullish trend, with potential for further upward movement, although regulatory challenges from the EU could pose risks in the medium to long term.
TECHNICAL ANALYSIS
As of September 05, 2023, Alphabet Inc. (Ticker: GOOGL) closed at $135.77. There was a slight change of 0.11 (0.08%), putting the price range for the day between $134.58 and $136.42. The stock's price is pretty close to its year high of $138, making a significant recovery from its year low of $83.34.
In terms of technical indicators, the relative strength index (RSI14) is at 66, indicating that the stock is approaching overbought territory, therefore, it may see a slight pullback. The 50-day moving average stands at $126.35 while the 200-day moving average is $108.48. This indicates a bullish trend in the recent past since GOOGL is trading well above both its moving averages. The Moving Average Convergence Divergence (MACD) is 0.73 suggesting an ongoing bullish trend. However, the high Average True Range (ATR) of 2.16 indicates high volatility for the stock.
The stock has a support level at $129.27 and a resistance level at $135.88. Next stop-loss is at $131.31. If the stock breaks the resistance, we could expect further upwards movement. If it falls below the support levels, a downward trend could be expected.
FUNDAMENTAL ANALYSIS
Alphabet Inc.'s market capitalization is a giant $1.72 trillion, with 12.66 billion shares outstanding. The reported earnings per share (EPS) is $4.71, resulting in a Price to Earnings (PE) ratio of 28.83. This suggests that the stock price is based on relatively high earnings expectations.
The consensus projection for the next trading day, September 06, 2023, is that the stock will trade around $139.67, according to the target consensus. High and low price targets are $190 and $59 respectively, with a median target of $140.
Analysts are mostly bullish on GOOGL, with 33 recommending a 'buy', and one each for 'hold' and 'sell'. The discounted cash flow (DCF) analysis suggests a value of $137.43 for the stock, slightly above its last close.
The upcoming earnings announcement on October 23, 2023, could be a potential catalyst for the stock in the near future.
The latest news suggests that Google, along with other tech giants, might face regulatory challenges due to the European Union's Digital Markets Act. Google's interest in buying Arm shares also suggests potential for growth and expansion.
OUTLOOK AND RECOMMENDATION
Considering both technical and fundamental analysis and, factoring in recent news, Alphabet Inc. displays significant potential for future growth. The stock is currently trading above its key moving averages which is typically a bullish indicator. The consensus among analysts is also favorably tipped towards a 'buy'.
However, upcoming regulatory challenges especially from the European Union could pose some risk in the medium to long term. Hence, potential investors should closely monitor these developments.
Given the current technical and fundamental aspects, the high DCF valuation, and the majority analyst recommendation, Alphabet Inc (GOOGL) is categorised as a 'Buy'.
This position is based on the information available at the current point in time. Investors are advised to conduct their own thorough research before making investment decisions.
