Alphabet Inc. Faces Challenges Despite Strong Earnings
Mountain View, California-based Alphabet Inc. (GOOG) is a major player in the tech industry, providing a wide range of products and platforms. With a market cap of $2.2 trillion, GOOG’s offerings include web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.
Stock Performance Trailings Broader Market
Over the past year, shares of this internet media giant have significantly lagged behind the overall market. GOOG’s stock has climbed 22.1%, while the broader S&P 500 Index ($SPX) has surged nearly 31.1%. In 2024, GOOG saw its stock rise by 20.1%, compared to the SPX’s 24.7% increase year to date.
Comparing to NASDAQ Internet ETF
When focusing on specific competitors, GOOG’s struggle becomes even clearer alongside the Invesco NASDAQ Internet ETF (PNQI), which has risen approximately 36.9% over the same period. Furthermore, PNQI’s YTD gain of 28.5% outpaces GOOG’s own growth.
Regulatory Challenges and Future Competition
The recent underperformance can be partially explained by a request from the U.S. Justice Department (DOJ) for Alphabet to divest its popular Chrome web browser due to an ongoing antitrust case. This request signifies rising regulatory scrutiny and could have serious effects on Alphabet’s operations and reputation. Added to this, the emergence of artificial intelligence (AI) and chatbots presents new hurdles for Google’s future, as enhanced competition in search advertising endangers its historical market dominance, a concern for investors looking for growth.
Strong Q3 Earnings Report
On October 29, GOOG shares increased by more than 1% following the announcement of its Q3 results. The company’s revenue reached $88.3 billion, up 15.1% from the previous year. Earnings per share (EPS) also rose significantly, increasing 36.8% year over year to $2.12, exceeding Wall Street’s estimates for both EPS and revenue.
Positive Analyst Outlook
Looking ahead to the end of the fiscal year in December, analysts project GOOG’s EPS to grow by 38.1% to $8.01 on a diluted basis. The company has consistently outperformed analysts’ expectations, marking beats in each of the last four quarters.
Analyst Consensus Strongly Positive
Among 50 analysts monitoring GOOG stock, the consensus rating is a “Strong Buy,” supported by 40 “Strong Buy” ratings, three “Moderate Buys,” and seven “Holds.” This rating is an improvement compared to just a month ago when 38 analysts endorsed the “Strong Buy.”
Price Target Projections
On November 6, Loop Capital reaffirmed its “Hold” rating while increasing the price target for GOOG to $185, suggesting a possible upside of 9.3%. The average price target of $210.31 implies a 24.3% increase from current levels. Notably, the highest target of $240 points to a significant possible upside of 41.8%.
On the date of publication, Neha Panjwani did not hold any positions in any of the securities mentioned in this article. The information contained in this article is for informational purposes only. For more details, view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein reflect those of the author and do not necessarily align with those of Nasdaq, Inc.
