Sign InAlphabet Inc.: Strong Fundamentals and Positive Outlook Amid Market Volatility
Summary
As of July 20, 2023, Alphabet Inc. (GOOGL) stock is noted to have a slightly negative short-term technical view, but a positive long-term outlook, with strong fundamentals, ongoing developments in the AI sector, and the active involvement of co-founder Sergey Brin, making it recommended to buy for long-term gains.
Fundamental Analysis
As of July 20, 2023, Alphabet Inc. (Ticker: GOOGL) stock closed at $119.2 per share on the NASDAQ exchange. The stock underwent a decrease from the previous trading day, by -2.32%, suggesting moderate market volatility. Despite this decrease, the share price is significantly above the year's low of $83.34, indicating an overall positive trend in the past year.
It's noteworthy that Alphabet has a substantial market capitalization of $1.50 trillion, cementing its position as a major player in the technology sector. Alphabet's significant shares outstanding, placed at 12.62 billion shares, further highlights its position within the market.
Alphabet's healthy Earnings Per Share (EPS) of $4.5 supports the argument that the company remains in a good financial health. The Price-to-Earnings ratio (PE ratio) of 26.49, while higher than some competitors in the tech industry, can be attributed to Alphabet’s growing commanding position within the technology sector and the expected future growth.
The company is set to make earnings announcements on July 25, 2023, an event that traditionally triggers fluctuations in stock prices. Thus, their announcement may introduce short-term volatility to their share price.
Technical Analysis
Alphabet's 50-day moving average stands at $121.08, being above the current price, it indicates a short-term bearish sentiment for the stock. However, long term view reveals a bullish sentiment with a 200-day moving average of $103.11, significantly below the current trading price.
Having a closer look at the Moving Average Convergence Divergence (MACD) of -1.28 (3-month) and the Relative Strength Index (RSI14) of 50, it is indicated that GOOGL is currently on a neutral-bearish trend.
The stock's discounted cash flow (DCF) stands at $120.86, which is slightly higher than the last closing price of $119.20. This may be indicative of a slightly undervalued stock and a potential opportunity for investors.
News Analysis
Recent headlines reveal Alphabet's ongoing efforts in developing AI technology, including the introduction of a tool that can write news articles. Co-founder Sergey Brin's active role in the company's AI development could potentially boost investor confidence in the company's capabilities. While AI technology is disrupting various sectors, including journalism, the technology poses a distinctive growth opportunity for Alphabet. By actively betting on AI, Alphabet looks set to strengthen its competitive edge in the long term.
Target Estimates
Given the current projections, Alphabet’s target range is expansive, from a high of $190 to a low of $59. The median estimate sits at $132, which is significantly above the stock's current price of $119.2.
Summary and Recommendations
Looking at the overall picture, Alphabet showcases strong fundamentals with a massive market capitalization and a healthy EPS. Although it currently demonstrates a slightly negative short-term technical view, it maintains a positive long-term outlook. The company’s ongoing developments within the AI sector and the active involvement of co-founder Sergey Brin are promising signs for the company's future.
Based on this comprehensive overview, it is recommended to Buy Alphabet's stock for long-term gains while also keeping an eye on forthcoming earnings announcements which may impact the stock's short-term value. The analysis suggests that the price of Alphabet's stock has a good potential to rise in the upcoming trading day and over the next week.
