Alphabet‘s (GOOGL) new chief financial officer, Anat Ashkenazi, starts July 31. For Google stock, her views on “guidance, capital allocation and transparency” will be areas to watch, said a Baird report.
For example, improved transparency over YouTube’s profitability and business trends could boost Google stock, some analysts say.
Investors will likely have to wait until Google’s Q3 earnings call to get Ashkenazi’s views on business operating trends. Google’s former CFO, Ruth Porat, ramped up buybacks of Google stock. Also, Alphabet doesn’t provide specific quarterly guidance.
Ashkenazi has held diverse financial, strategy, and operations roles at pharmaceutical giant Eli Lilly (LLY) for over 23 years, including serving as CFO for the past three years.
Amid the 2024 gain of Google stock so far, whether the internet giant is a buy depends on fundamental and technical factors as well each investor’s own goals, strategy and risk tolerance.
Meanwhile, the next catalyst for Google stock could come Aug. 9 when Alphabet hosts an event to showcase new artificial intelligence-ready Pixel 9 mobile phones.
Alphabet delivered mixed second quarter financial results for Google stock, with the internet search advertising business and cloud computing unit topping expectations but YouTube missing.
Alphabet Stock: OpenAI, Apple Worry
Google stock has climbed 23% this year as investor fervor over generative artificial intelligence drives big gains in technology companies. But a market rotation out of high-flying tech companies appears underway.
Google stock hit a new all-time high of 191.75 on July 10 but has pulled back since then. Further, Alphabet has dropped off the IBD 50 roster of growth companies. And, Google stock has dropped below its 50-day moving average.
Headwinds continue. Artificial intelligence startup OpenAI on July 25 said it’s testing SearchGPT. “While we don’t see a significant direct competitive search risk for Google on mobile given Google’s tech and distribution advantages, we do see some longer-term risk for Alphabet from a potential OpenAl and Apple (AAPL) search partnership,” said Bank of America analyst Justin Post in a report.
Google Stock: AI Outlook Key
Meanwhile, amid the emergence of generative AI, there’s debate over whether Google stands out as a tech industry leader or lags startup OpenAI. Also, Google stock is among many AI stocks to watch.
In addition, Google aims to counter Microsoft‘s (MSFT) investment in OpenAI by making its own generative AI tools available to software developers. Google’s large language model (LLM) is called Gemini.
The impact of generative AI on Google’s core internet search advertising business remains a key issue. Google has embedded its Gemini AI model tools and chatbot AI technology into its search engine.
Google began widely deploying AI Overviews in the U.S. in mid May, with conversational summaries topping links for many search queries. Also, Google plans to expand AI Overview’s availability globally to 1 billion users by year end.
In a major reversal, Google plans to keep consumer tracking technology known as “cookies” in Chrome browser. Google will present Chrome users with a prompt to decide whether to turn cookies on or off. Google has taken steps to eliminate cookies for four years, a project called Privacy Sandbox. Digital-advertising companies and regulators worried that Google’s influence would be even greater by getting rid of cookies.
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From Search To Advertising, Will Google’s Big AI Bet Pay Off?
DOJ Anti-Trust Case Ruling Looms
Meanwhile, a ruling in the Justice Department’s nonjury antitrust trial vs. Google could come soon.
The government alleges Google maintains an internet search monopoly “through exclusionary distribution agreements that steer billions of search queries to Google each day.” Google’s payments to Apple are under scrutiny in the anti-trust lawsuit.
If Google loses, U.S. District Judge Amit Mehta could order a Google breakup or changes to the way Google promotes its search engine. Google will likely appeal any court decision.
Due to its huge cash holdings, Google has shrugged off three fines totaling $9.3 billion levied by the European Union on antitrust grounds.
Analysts say Google stock is getting a boost from the Performance Max advertising platform. It automates buying across YouTube, internet search, display, Gmail, maps and other applications. Performance Max lets advertisers manage campaigns across all Google ad inventory. Advertisers that use the tools convert more shoppers into buyers, Google says.
Alphabet Stock: Cloud Computing Key
Aside from Google’s core internet search advertising business, Wall Street analysts view growth at YouTube and cloud computing as key. Another question is the performance of Google’s hardware business, where it’s battling Apple in smartphones.
Google aims to slow down the growth of TikTok with its own short video platform. How much money Google generates from YouTube Shorts is a key issue for 2024, analysts say. YouTube Shorts now generates roughly 70 billion daily views.
In cloud computing, Google is still the third biggest service provider, behind Amazon.com (AMZN) and Microsoft. Like Amazon Web Services and Microsoft’ Azure business, Google’s cloud unit has upped capital spending targeting the new opportunity in generative AI.
Google’s 2022 acquisition of cybersecurity firm Mandiant for $5.4 billion seems to be paying dividends. Mandiant is part of Google’s cloud-based cybersecurity services.
Further, Alphabet’s money-losing “Other Bets” and Moonshots are company assets that investors should monitor for new developments, according to an IBD report. While the roll-out of robo-taxi services by Waymo has lagged expectations, it’s still viewed as a leader in autonomous vehicles.
Google Stock: Is It A Buy Or Sell Now?
Alphabet stock has turned in good and bad years recently. Shares jumped 65% in 2021 but in 2022 dropped 39%. Despite mounting competition in AI and internet search, Alphabet advanced 58% in 2023.
Also, the Relative Strength Rating of Google stock currently stands at 79 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better. The relative strength line has tumbled.
Google stock holds an Accumulation/Distribution Rating of E. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, shares hold an IBD Composite Rating of 82 out of a best possible 99. The best growth stocks have a Composite Rating of 90 or better.
On MarketSurge, Google stock holds an entry point of 153.78. As of July 31, Alphabet is extended and trades above a 5% buy zone. Long-time holders could take profits since the Magnificent Seven are struggling.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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