Alphabet shares are showing renewed strength after a prolonged period of underperformance compared to its tech counterparts. Investor optimism is rising, fuelled by expectations of robust earnings and the company’s positioning in the artificial intelligence sector. This resurgence occurs as the market awaits a ruling in the Justice Department’s antitrust case concerning Google’s internet search dominance, with potential outcomes including a breakup of the company. Alphabet is a multinational technology company that focuses on search engine technology, online advertising, cloud computing, computer software, artificial intelligence, e-commerce, and consumer electronics. Google is Alphabet’s main revenue-generating entity.
According to Luke O’Neill, chief investment officer at CooksonPeirce Wealth Management, Alphabet’s stock appears highly attractive if it can achieve its projected growth. He acknowledged concerns regarding potential antitrust remedies and the long-term effects of AI but expressed caution about adopting an overly negative outlook. For the second quarter, Bloomberg anticipates Alphabet to report net earnings of $US2.18 per share on revenue close to $US80 billion ($122 billion). These figures would signify a 15 per cent and 12 per cent increase, respectively, compared to the same period last year. The company’s annual sales are projected to maintain a similar growth rate through 2028.
On Tuesday (Wednesday AEST), Alphabet shares experienced a 0.7 per cent increase, contributing to a 9.7 per cent rise over the ten-day rally. Year-to-date, the shares are up by 1.1 per cent. Although investor confidence in Alphabet’s AI capabilities has improved, the stock continues to trail behind the Nasdaq 100 Index and competitors like Meta Platforms. Antitrust concerns add to fears that Google is at risk of losing share in the web search market from AI chatbots.
Despite Alphabet’s recent gains, it still lags behind the Nasdaq 100’s near 10 per cent advance and Meta’s 20 per cent gain for the year. Investors are keenly watching Alphabet’s earnings performance and the resolution of the antitrust case, which are pivotal factors influencing the stock’s future trajectory.
