Google Stock: Is It A Buy Right Now? Here’s What Earnings, GOOGL Stock Chart Show

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Google stock in 2021 finally outperformed other “FANG” stocks. Google-parent Alphabet (GOOGL) bested Facebook-parent Meta Platforms (FB), Amazon.com (AMZN) and Netflix (NFLX).




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Helping the online search giant was a rebound in digital advertising as the coronavirus emergency fades, boosting global economies as industries normalize. But 2022 has been a volatile year for the original FANG stocks.

Shares in Meta Platforms plunged on its fourth-quarter earnings report Feb. 3. Earlier, Netflix stock took a beating. Amazon stock managed to pop on its fourth-quarter earnings.

Meanwhile, GOOGL stock jumped 65% in 2021. Thus far in 2022, shares have dropped 13%, with shares at 2,519.02 before the market open on March 15.

Breaking below 2,490 would be bearish because GOOGL stock would be falling further beneath the 200-day moving average. A big break below the 200-day would imply sellers are still in command and that a longer, or deeper, correction is in the cards. Or both.

Google stock shot up on its fourth-quarter earnings report. But shares then pulled back amid volatility in the Nasdaq.

Google-parent Alphabet announced a 20-for-1 stock split, which takes effect after the close of business July 15. The stock split could pave the way for the tech giant to enter the Dow Jones Industrial Average. Retail investors should benefit.

GOOGL Stock: Tough Year-Over-Year Comparisons

Hiring and investments continue to ramp up for the company. Alphabet expects a “meaningful increase” in 2022 capital spending, reflecting investments in computer servers in internet data centers and construction of office space.

GOOGL stock will also face more difficult year-over-year growth comparisons in 2022 as the coronavirus emergency fades.

“We expect smaller beats in 2022 as search growth slows and operating expenses increase,” Bank of America analyst Justin Post said in a note to clients.

He added: “However, versus peers, Alphabet has more earnings stability, more potential exposure to an ongoing rebound in local and travel verticals, evidence of artificial intelligence advantages across the product stack and a management team doing more for shareholders (buybacks and now stock splits).”

The company repurchased $13.5 billion of Google stock in the fourth quarter, up from $12.6 billion in the September quarter.

After a long run, GOOGL stock has dropped out of the IBD Leaderboard. The Leaderboard is IBD’s curated list of leading stocks that stand out on technical and fundamental metrics.

Google Stock: Play Store Revenue To Fall

With the Android mobile operating system built into devices sold worldwide, revenue growth from the Play Store continues to be a bright spot.

But a federal judge ruled Sept. 10 that Apple (AAPL) must allow mobile app developers to steer consumers to outside payment methods, granting an injunction sought by Epic Games in a year-long court battle. Google’s policies also are under scrutiny.

Google in October said service fees at its Play Store would drop to 15% from 30%. The move will reduce revenue.

Large-cap internet stocks face regulatory headwinds. In a surprise move, President Joe Biden on June 15 last year named Lina Khan as chairwoman of the Federal Trade Commission. Khan has been a critic of supersized technology companies.

On July 20, Biden nominated Jonathan Kanter, another long-time critic of Big Tech, to lead the antitrust division at the Justice Department. Further, Biden issued an executive order targeting Big Tech.

Under new Alphabet Chief Executive Sundar Pichai, Google has improved transparency. In 2021, Google disclosed that its fast-growing cloud computing business is unprofitable amid high investments. Still, cloud computing operating margins are expected to improve.

GOOGL Stock: U.S. Supreme Court Rules Against Oracle

GOOGL stock broke out on April 5 after the U.S. Supreme Court ruled in Alphabet’s favor in a copyright dispute with Oracle (ORCL) involving Android mobile software. But Google stock bears point to tougher regulation aimed at the search giant.

The Justice Department in October 2020 filed an antitrust lawsuit against Google.  The Justice Department charged that Google has harmed competition and consumers by monopolizing internet search and search-related advertising. Due to its huge cash holdings, GOOGL stock has shrugged off three fines totaling $9.3 billion levied by the European Union on antitrust grounds.

The Justice Department, though, could force Google to restructure if it wins in court. Some analysts say Google stock will be worth more if the company is broken up. A legal battle likely will drag on for years.

Most investors still know the company as Google, even though the internet search giant reorganized as holding company Alphabet in 2015. The restructuring move separated Google’s core internet advertising business from so-called moonshots, such as autonomous vehicles and the Verily Life Sciences unit. Google stock could get a boost if Verily files an initial public offering.

In a cost-savings move, Google has shut down Loon, its internet balloon project.

Google stock’s strength in artificial intelligence spans digital advertising, the Google Cloud Platform, YouTube and consumer hardware products. GOOGL stock is just one artificial intelligence stock to watch.

At a Google developers conference in mid-May, the company demonstrated how it uses AI tools in a wide range of applications, including Google Workspace, Google Maps, virtual reality, voice-based search and photos.

Google Stock: Advertising Core Business

While Google has expanded into cloud computing and consumer hardware, digital advertising still makes up the lion’s share of revenue. Google on June 24 said it would delay plans to have its Chrome internet browser stop supporting third-party cookies by late 2023, two years later than its initial timeframe.

Amazon is taking market share from Google stock in internet search-related advertising, said a report from market research firm eMarketer. With Amazon gaining ground in digital advertising, Google in 2020 made a big change in how it handles e-commerce listings. Google has also deepened ties to Shopify (SHOP), a provider of e-commerce software.

In December, 2019, Google co-founder Larry Page stepped down as Alphabet’s CEO. Pichai, who headed the Google unit, replaced him. Google co-founder Sergey Brin stepped down as Alphabet’s president.

Google’s profit margins remain an issue amid high investments in data centers for cloud computing, artificial intelligence, YouTube and consumer products. In early 2018, Google changed accounting methods. It switched to reporting GAAP earnings, or generally accepted accounting principles. GAAP earnings include stock-based compensation.

Bank of America forecasts that YouTube’s subscription business will reach $18 billion in revenue by 2025, up from $5 billion in 2020. In addition, YouTube is benefiting as major brands shift ad budgets from linear TV to digital channels. Late last year, Google reported that YouTube has more than 30 million music and premium paid subscribers, while YouTube TV has more than 3 million subscribers.

GOOGL Stock: Fundamental Analysis

In the December quarter, Google GAAP earnings jumped 38% to $30.69 per share, including a $2.84 per-share gain in equity investments. Depending on how the Nasdaq fares in 2022, Google’s gains on equity investments might reverse, said a recent UBS report.

Also, gross revenue rose 32% to $75.33 billion. Analysts had estimated Google earnings of $27.68 per share on gross revenue of $72.3 billion.

The company said net revenue — minus traffic acquisition costs — came in at $61.90 billion vs. estimates of $59.25 billion. Traffic acquisition costs jumped 28% to $13.43 billion.

Internet search and other revenue rose 36% to $43.30 billion vs. estimates of $40.95 billion. Google said cloud-computing revenue rose more than 45% to $5.54 billion vs. estimates of $5.57 billion. Google cloud cut its operating loss to $890 million, missing estimates of a lower $758 million loss.

Meanwhile, YouTube advertising revenue rose 25% to $8.63 billion. Analysts had estimated YouTube ad revenue of $8.81 billion.

Waymo Autonomous Vehicle Business

A key question for investors is how much should Google’s self-driving-car project Waymo and “Other Bets” such as the Verily Life Sciences unit figure into valuation.

In early 2018, some analysts projected Waymo’s long-term valuation in a range of anywhere from $75 billion to $125 billion. Expectations for autonomous vehicles, though, have been lowered recently.

Waymo in early March raised $2.25 billion in funding from outside investors. including private equity firm Silver Lake, the Canada Pension Plan Investment Board and Abu Dhabi’s Mubadala investment arm.

While Google did not disclose Waymo’s valuation in the funding round, reports said it was only $30 billion.

Waymo CEO John Krafcik, head of the autonomous vehicle unit since 2015, resigned in early April. Alphabet said he would be replaced by two co-CEOs — Tekedra Mawakana and Dmitri Dolgov. Mawakana had been Waymo’s chief operating officer while Dolgov was Waymo’s chief technology officer.

Waymo in December announced a new alliance with China’s Geely. They plan to collaborate in a Zeekr-branded, self-driving van.

Another question is the performance of Google’s hardware business. It’s battling Apple in smartphones and Amazon in smart-home appliances.

In addition, Google’s new cloud gaming service, Stadia, launched in late 2019. However, Stadia has pulled back on investments in game creation.

GOOGL Stock: Technical Analysis

Also, Google in late 2019 agreed to buy smartwatch maker Fitbit for $2.1 billion. The purchase could help Google make a push into the health and fitness market, analysts say. The Fitbit deal finally closed on Jan. 14.

Google’s cloud computing business, meanwhile, faces tough rivals in Amazon and Microsoft (MSFT). Google brought in Thomas Kurian, a former Oracle (ORCL) executive, to improve performance in the corporate market. Bulls say Google Cloud Platform is beginning to take share as it focuses on security, open source software and data analytics.

In June 2019, Google purchased data analytics firm Looker for $2.6 billion in cash. Santa Cruz, Calif.-based Looker’s analytics platform uses business intelligence and data visualization tools. More acquisitions to boost Google’s cloud business could be coming, analysts say.

Google on March 7 said it’s acquiring cybersecurity firm Mandiant (MNDT) for $23 per share in an all-cash $5.4 billion deal.

Mandiant provides cyber-incident response and cybersecurity testing services. FireEye split off Mandiant last year. FireEye then sold its products business to private equity investors.

Upon the close of the acquisition, Mandiant will be part of Google’s cloud computing business.

Meanwhile, Google’s Relative Strength Rating is only 65 out of a best possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.

Google Stock: Is It A Buy Now?

Google stock owns an Accumulation/Distribution Rating of C-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.

The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.

GOOGL stock holds an IBD Composite Rating of 85 out of a best possible 99.

IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

With a gap-up following the Q4 earnings report, Google stock briefly crossed into a buy zone. The stock retreated and trades near its 50-day moving average.

Google stock holds an entry point of 3,019.43. As of March 15, GOOGL stock trades about 16% below the entry point. It’s not in a buy zone amid volatility in the tech sector.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and 5G wireless.

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