- Summary:
- The Alphabet share price has made a strong recovery in the past few weeks. GOOG stock rose to a high of $96.50. What next?
The Alphabet share price has made a strong recovery in the past few weeks. GOOG stock rose to a high of $96.50, which was about 17% above the lowest level this year. This rebound pushed the market cap to more than $1.25 trillion. At its peak, the Google parent company had a market valuation of over $2 trillion.
Is Google a good value buy?
Alphabet, together with its other FAANG companies, was always valued for its growth. For a long time, the company was seeing significant growth as it dominated the digital ad market. Recently, however, business conditions have changed and its growth has been relatively muted.
For one, competition in the digital ad market has grown robustly. TikTok, the Chinese sensation, expects to make more than $10 billion in revenue this year. This is a strong rebound for a company that was making less than a billion recently.
Similarly, Amazon has grown its ad business so much that it will make over $30 billion in revenues this year. Netflix has also moved to the ad market. All these events have taken some market share from companies like Google and Meta Platforms.
As a result, investors are now valuing Alphabet as a value stock rather than a growth one. It has over $116 billion in cash and short-term investments and just $12 billion in long-term debt. This makes it one of the most financially stable companies in the world. At the same time, like other tech firms, it has a room to save money by adjusting its workforce.
Key drivers for Alphabet stock
With the ad market slowing, a key driver for the Alphabet stock price will likely be the cloud segment. Google competes with the likes of Amazon, Microsoft, and IBM to provide cloud infrastructure for firms globally. Google is miles behind these competitors and the division is still making losses. Still, the company will likely continue doing well.
Another potential catalyst for the Alphabet share price is the growth of YouTube Premium service. YouTube Music goes for $9.99 a month while YouTube Premium goes fie $11.99. Users enjoy ad-free listening in these platforms and other smaller perks.
YouTube Music and Premium users have been growing in the past few years and they stand at over 50 million. This growth will likely accelerate in the coming years as the company launches the product to other countries.
Alphabet share price forecast
The four-hour chart shows that the GOOG stock price has made a strong recovery recently. As it rose, the shares managed to move above the 25-day and 50-day moving averages. The Stochastic Oscillator has moved to the overbought level.
It remains slightly below the important resistance level at $102.55. A clear rebound will only be confirmed if the stock manages to move above this resistance level. Before that, this rebound could be a break and retest pattern, which will see it resume the bearish trend.
