Alphabet Inc
Established in 1998 by Sergey Brin and Larry Page, Google is a $1.9 trillion American search engine and subsidiary of Alphabet Inc. Playing a central role in the online experience of over 70% of global internet users, the company is a powerhouse in various technological domains.
Google's diverse forays span from artificial intelligence, online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce to consumer electronics.
Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.
Google Investment Thesis
Google presents a compelling investment opportunity with robust financials. Strong revenue growth and expanded margins contribute to impressive net income expansion. Its core businesses like Google Search and YouTube already thrive, while Google Cloud is steadily gaining substantial market share.
Despite the competition, Google's dominant technology assets and commitment to shareholder returns enhance its investment value. Strategic balance sheet cleanup has led to improved operating income, notably from core services and a positive impact from Google Cloud.
As a technology leader, Google's DeepMind division excels in artificial intelligence. Despite commercialization challenges, Google's underlying language models remain competitive. The shift of Google DeepMind + Research to a separate corporate costs division underscores the company's substantial AI investment. Aggressive share repurchases demonstrate Google's focus on increasing shareholder returns.
The company's dedication to open-source projects reflects its technological prowess. Google's strong financials, strategic moves, and leadership in cutting-edge technologies make it an attractive, long-term investment opportunity.
Google Analysts' Focus & Consensus Ratings
Q4 Analysts' Focus: Analysts will be assessing Google's positioning in the AI space focusing on whether the company can comfortably navigate AI threats that it faces. ChatGPT is a key competitive risk to the company, however, its core AI assets are market-leading and competitive.
The company has already experienced a ~3% reduction in its employee count due to layoffs and the announcement of additional layoffs in 2024 indicates a strategic move. The impact of these layoffs on the company would be under assessment.
The company remains a cash-flow giant and has always focused on shareholder returns. How well it can continue to use its cash flow to drive substantial shareholder returns through share buybacks, would also be on analysts' focus.
Ratings & Consensus Estimates: Consensus analyst ratings on Google stock stand at a Buy currently with a consensus price target of $131.85.
GOOG Price Action: Google stock was trading at $153.79 at the close of trading day on Jan. 26.
