Google parent company Alphabet Inc‘s GOOGL GOOG shares are weathering a storm. The stock has plunged 35% from its peak, firmly entrenched in bear territory.
Alphabet’s descent stands out among tech juggernauts, sparking speculation among investors pondering whether a revival is on the horizon or if caution remains warranted.
Alphabet Ventures into Deep Bearish Territory
Currently, Alphabet stock finds itself deep in bearish waters. Trading below its five, 20- and 50-day EMAs, it signals a robustly bearish trajectory. Nevertheless, a glimmer of buying activity hints at a potential turnaround ahead.
Chart created using Benzinga Pro
Presently priced at $157.53, slightly above its eight-day SMA of $153.17, Alphabet showcases a bullish signal in the short term. Yet, with the stock lingering beneath its 20-day SMA of $159.68 and the 50-day SMA of $168.01, the broader outlook remains bearish.
The 200-day SMA at $157.08 closely aligns with the stock price, having traded below this average in recent times.
Chart created using Benzinga Pro
The MACD indicator casts a gloomy shadow at a negative 4.01, signaling further bearish sentiment. Meanwhile, the RSI of 45.74 suggests Alphabet stock is neither in overbought nor oversold territory. The Bollinger Bands, with a range between $149.03 and $171.41, position the stock in the lower bearish band, indicating ongoing selling pressure.
Unpacking Google Stock Investor Pessimism
What drives Alphabet investors and traders towards pessimism?
Primarily, an antitrust lawsuit from the U.S. Department of Justice and parallel antitrust actions in Europe have cast a shadow of regulatory scrutiny over the company. This oversight breeds apprehension among investors regarding potential penalties that could burden the stock.
Additionally, the substantial investment in AI development by Alphabet and other tech behemoths, while promising, strains short-term capital efficiency.
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Can Alphabet Rally from the Brink?
Why should one bet on Alphabet staging a comeback?
Alphabet boasts a robust balance sheet. With revenue growing at 18.16% annually and EPS climbing 21% over the last five years, supported by aggressive share buybacks, the company remains financially solid. Minimal debt, substantial cash reserves, and the recent introduction of a dividend sweeten the deal for long-term investors.
As Alphabet maneuvers through antitrust challenges and streamlines its AI-related capital spending, it could reclaim its historical capital efficiency, presenting an opportune moment for a rebound in the long term.
For now, the short-term outlook for Alphabet stock appears dim.
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