AI Initiatives - And This Business - Have Google Stock On Cloud 9
From Amazon.com (AMZN) and Microsoft (MSFT) to Apple (AAPL) and Nvidia (NVDA), the titans of tech have their bots and thoughts focused on artificial intelligence. Google parent Alphabet (GOOGL) is certainly no exception. Buoyed by a fresh slate of AI initiatives. Google stock has jumped into a fresh buy zone and beyond.
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While announcing artificial intelligence moves at the Google I/O 2023 developers event this week, Alphabet stressed that the business that put Google on the map — advertising — is here to stay.
But as IBD explains, questions remain on how an AI alliance between Microsoft and OpenAI will impact Google's core digital ad business.
Google Stock Among 5 AI Stocks To Watch
Last year's bear market ravaged most stocks, particularly tech names. Along with Alphabet, AMZN, MSFT, AAPL and NVDA stock all took a beating.
With the exception of Amazon, the Composite Ratings for each of these companies now stands at 93 or higher.
Reflecting institutional demand for these leading AI stocks (which, of course, have massive footprints beyond artificial intelligence), Alphabet and the others have a B- or better Accumulation/Distribution Rating. This unique rating tracks big-lot buying and selling by mutual funds and other large investors over the last 13 weeks.
Microsoft topped the latest list of new buys by the best mutual funds, with top money managers scooping up over $10.2 billion worth of MSFT stock. Still hampered by last year's shift away from tech, none of the other AI stocks shown here made the cut, including Alphabet.
Company Symbol Comp Rating EPS Rating RS Rating SMR Rating A/D Rating Nvidia NVDA 97 63 97 B A- Microsoft MSFT 95 90 91 A B+ Alphabet GOOGL 93 75 84 B B- Apple AAPL 93 80 89 A B+ Amazon AMZN 72 41 79 D B
Alphabet Maps Out A Rebound
As tech tumbled last year, so did the cloud and search giant's earnings and sales growth. Alphabet's revenue growth fell into the single digits, ranging between 1% to 6% the past three quarters. Earnings growth also dried up, showing quarterly EPS slowdowns for the entire year.
Alphabet kicked off 2023 by topping Q1 earnings and sales estimates. Analysts forecast 7% earnings growth in current Q2 and a 16% jump for the year.
After last year's slump, the company's SMR Rating slipped to a B, but Alphabet maintains a solid 26.2% annual pretax profit margin and 24.5% annual return on equity.
While its core digital advertising business, the Google Cloud platform, the promise of generative AI and other initiatives continue to spur growth for Alphabet, the competitive landscape with Amazon, Microsoft, Apple and others is guaranteed to heat up.
Google Stock Turbocharges Its Ascent
Alphabet cleared a 106.69 buy point in a cup with handle on April 6 — prior to reporting Q1 earnings on April 25. Google stock meandered in and out of buy range before spiking to the top of its buy zone on Wednesday. Volume spiked 87% higher than normal. It is also possible to see a larger cup base with a 122.53 buy point.
On Thursday, blasted beyond its buy zone, gapping up to close over 4% higher in heavy and rising volume.
Meanwhile, fellow AI stocks Microsoft, Nvidia and Apple continue to ride the tech rebound. Even Amazon stock has shown resilience, jumping back above its 200-day line in rising volume.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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Source: Investor's Business Daily
