The sirens are blaring – it seems Alphabet (GOOG) (GOOGL) has hit a rough patch in the market. With a year-to-date gain of just over 12%, Alphabet is counted among the underwhelming performers of the “Magnificent 7” cohort, lagging even behind the S&P 500 Index. A recent court ruling echoing monopolistic accusations against Alphabet’s online search dominance has sent shivers through the market. Whispers of splitting up this tech giant are growing louder, instilling fear in investors. Is it time to let greed take the wheel and snatch up Alphabet shares for Q4? Let’s dive deep into this tempestuous ocean of financial waters.
Assessing the GOOG Stock Forecast
Despite holding a consensus “Strong Buy” rating from analysts, GOOG’s mean target price of $202.09 sparkles above Monday’s closing values, projecting a 27.1% upturn. However, caution flags are waving for Alphabet. Recently, Rosenblatt, Bernstein, and Loop Capital have shifted their stance on GOOG from “buy” to “neutral,” while Phillip Securities raised the stock to “buy” over the last quarter. Just days ago, Evercore ISI clipped Alphabet’s target from $225 to $200 while keeping an “overweight” rating.
Challenges Looming Over Alphabet
The dark clouds over Alphabet’s head are not just for show. Regulatory risks loom large, with Bernstein warning of potential litigations totaling $100 billion from overcharged advertisers. This crackdown could throttle Google’s aggressive business tactics. The chant for fragmentation of Alphabet, aimed at chopping down its colossal empire, adds another layer of apprehension.
Moreover, the competitive flames are licking Alphabet’s heels, with Amazon and other heavyweights nibbling at its advertising stronghold. As the battle for ad dollars intensifies, Alphabet’s core advertising business is under siege. Additionally, the mystique of artificial intelligence has Alphabet on its toes, as competitors aim to dethrone Google’s online search supremacy, heralding an epoch of uncertainty.
Is Now the Time to Embrace Greed and Invest in Alphabet?
Amidst the storm, Alphabet remains an enigma offering a forward-looking price-to-earnings (P/E) multiple of 20.4x, marking it as the cheapest among the “Magnificent 7” group and a discount compared to the market average. While tech valuations soar skywards, GOOG stands as a lone wolf, prowling at a discount to its historical norms.
Peering into Alphabet’s treasure trove, YouTube emerges as a diamond in the rough, reigning as the supreme streaming platform on U.S. TV screens. With ample room for monetization through subscription services, Alphabet has yet to unveil YouTube’s full potential. The Waymo self-driving unit, in cahoots with Uber for autonomous ride-hailing, spells a future of innovation. In addition, Alphabet’s Cloud division, reaping $10 billion in Q2 revenues with a $1 billion operating profit, emerges as a potent growth engine.
The specter of regulatory woes may cast a shadow, but the tides are hinting at a sea change. While Alphabet’s stock price bears the heavy burden of regulatory disruptions, a bold play on this underdog tech titan could yield fruitful returns in the coming years. As the dust settles, Alphabet stands poised for a potential resurgence, shrugging off the short-term noise to unlock long-term value.