Alphabet Inc, the parent company of search engine giant Google, is currently facing turbulent times in the stock market. With shares plummeting 35% from their record highs, Alphabet finds itself deep in bear territory, raising questions among investors about the possibility of a revival or the need for caution.

Analyzing Alphabet Stock’s Bearish Trajectory

From a technical perspective, Alphabet stock is navigating through distinctly bearish waters. The stock is sliding beneath its five-, 20-, and 50-day exponential moving averages (EMAs), indicating a strong downtrend. Despite some hints of buying activity, the overall trend remains worrisome.

Chart created using Benzinga Pro

While the current share price of $157.53 slightly exceeds the eight-day simple moving average of $153.17, indicating a short-term bullish signal, the stock remains below the 20-day and 50-day SMAs. The broader view reveals a persisting bearish trend, with the 200-day SMA almost aligning with the current stock price.

Chart created using Benzinga Pro

Indicators such as the MACD at a negative 4.01 and the RSI at 45.74 suggest a bearish sentiment, with the Bollinger Bands signaling further downward pressure in the price levels.

Understanding Investor Pessimism Towards Google Stock

What is driving the bearish sentiment among Alphabet investors?

Firstly, Alphabet is grappling with antitrust lawsuits from both the U.S. Department of Justice and the European Union, stirring concerns about potential financial penalties. Additionally, the company’s hefty investments in artificial intelligence (AI) development, while promising, are straining its short-term financial efficiency.

Read Also: Google, DOJ Trial Drama To Hit Earnings By Up To 10%, Says JPMorgan: ‘Status Quo Is No Longer Possible’

Is Alphabet Positioned for a Potential Rebound?

Despite the current challenges, why consider a potential comeback for Alphabet?

Alphabet boasts a robust balance sheet with steady revenue growth of 18.16% annually and a 21% rise in earnings per share (EPS) over the past five years. Supported by aggressive share buybacks, minimal debt, ample cash reserves, and the recent introduction of dividends, Alphabet remains an attractive long-term investment.

Once Alphabet overcomes its regulatory hurdles and streamlines its AI-focused investments, the company could regain its former capital efficiency, setting the stage for a resurgence in the stock over the long run.

While short-term projections may appear dim, the underlying fundamentals suggest a potential turnaround for Alphabet in the future.

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