Sign InSummary
Alphabet Inc. (GOOGL) experienced a significant increase in its stock price and shows growth potential, but caution is advised due to an overbought RSI and high P/E ratio, according to a fundamental and technical analysis dated July 28, 2023.
Fundamental Analysis
Alphabet Inc. (GOOGL) recently closed at $132.58 as of July 28, 2023. This is a significant 2.46% increase, denoting growth potential. Alphabet's year-to-date performance revealed a year high at $133.735 and a year low at $83.34, evincing a substantial range of price fluctuations.
With a market capitalization of roughly $1.69 trillion, Alphabet belongs to the major league of companies. However, its P/E ratio is 30.13, noticeably above the average for the tech sector, suggesting the stock could be overpriced. However, this must be evaluated in light of Alphabet's earnings per share (EPS) growth, which currently stands at $4.4—a positive sign indicating the wider value of the company.
Turning to trading volume, Alphabet has a typical volume of around 34.77 million shares traded, with a slight jump to 35.03 million in the previous session, signifying an increase in trading activity. This could represent heightened investor interest in the stock.
Regarding Alphabet's future profitability, the expected earnings announcement on October 23, 2023 should offer crucial insights into the stock's possible direction.
Moreover, Alphabet posted 7% revenue growth, disclosed in a recent news publication, with earnings rising faster and its Google Cloud Platform carrying on strong momentum. This further denotes increasing investor interest and a probable further rise in the stock's price.
Technical Analysis
On a technical level, Alphabet's Relative Strength Index stands at 78, indicating overbought conditions. Such high RSI levels could suggest an upcoming price correction.
The 50-day moving average stands at $122.36, substantially lower than the present closing price, suggesting a bullish trend in the mid-term. Similarly, the 200-day moving average of $103.828 also stands markedly below the last closing price, indicating a longer-term upward trend.
However, the positive MACD of 0.55 signals upward momentum on this stock—a bullish sign.
Prediction and Final Evaluation
Based on the expected discounted cash flow, the estimated price per share should stand at $134.24 for the following trading day on July 31, 2023.
Considering the target consensus of $139 and the bullish indicators derived from moving averages and positive news, Alphabet's stock seems well-positioned for further gains, including the possibility of reaching a high target of $190. Nevertheless, the overbought RSI and high P/E ratio advise caution.
To conclude, Alphabet's stock is characterized by strong performance and positive momentum, reflected by its solid foundation and growth potential. However, given the overbought indicators and high P/E ratio, new investors should monitor for any price correction opportunities. Therefore, Alphabet's stock is rated as a Hold.
