Source: PaxForex Premium Analytics Portal, Fundamental Insight
Tech stocks experienced a robust surge in 2023, exemplified by the Nasdaq-100 Technology Sector index's impressive 67% gain over the past 12 months. Wall Street's enthusiasm for burgeoning markets such as artificial intelligence (AI) and cloud computing has contributed to this bullish trend, foreseeing substantial growth potential in the years ahead.
Alphabet, wielding vast financial resources and commanding multiple sectors of the tech landscape, stands out as a compelling investment choice. Leveraging its Google brand, Alphabet has diversified its reach across various markets, establishing dominance in digital advertising and making substantial investments in AI.
The tech giant's stellar performance is underscored by a remarkable 107% increase in annual revenue over the last five years, accompanied by a soaring operating income of 130%. The ongoing expansion of the tech market positions Alphabet favorably for sustained earnings growth in the long term. Here's why Alphabet stock remains an attractive option for the new year.
Alphabet's pivotal entry into the tech arena with Google secured its commanding position, boasting over 80% market share in search engines for an extended period. Google's strength in the consumer market, coupled with its extensive user base, has presented abundant growth opportunities. Alphabet strategically utilized this foundation to cultivate a lucrative advertising business.
According to Statista, the digital advertising industry is valued at $680 billion, and Alphabet commands a significant 25% market share. With key assets like Google Search, Android, and YouTube, over 80% of Alphabet's revenue is derived from advertising, consistently delivering substantial gains.
In the third quarter of 2023, Alphabet demonstrated robust financial performance, registering an 11% year-over-year revenue growth. The company exceeded analysts' expectations by $980 million, primarily driven by notable increases in the Google Search and YouTube segments. This positive trajectory positions Alphabet as an enduring and compelling investment choice, signaling that it's not too late to consider Alphabet stock for the new year.
Google stands among the most recognizable brands worldwide, lending its name to numerous successful ventures across various industries. Under the umbrella of Alphabet, the company has triumphed in cloud computing, productivity software, web browsers, and beyond.
One notable success is the Google Cloud platform, which exhibited significant promise by achieving a remarkable 23% year-over-year revenue growth in Q3 2023. Positioned as the third-largest cloud platform, trailing Amazon Web Services and Microsoft's Azure, Google Cloud is rapidly expanding. Alphabet's substantial investments in artificial intelligence (AI) over the past year are expected to enhance Google Cloud with advanced AI features, mirroring updates across its diverse range of services.
Alphabet's stellar financial performance is evident as it reached $78 billion in free cash flow in 2023, outpacing industry giants like Amazon and Microsoft. The company's robust financial position empowers its ongoing research and development initiatives, especially in the realms of AI and technology. With a 172% surge in shares over the last five years, Alphabet's current trajectory suggests the potential for further growth in the next half-decade.
While Alphabet has somewhat flown under the radar amid the spotlight on AI expansions by other companies in the "Magnificent Seven" group this year, its shares have still witnessed a commendable 59% climb. Although this growth is impressive, it falls short of the triple-digit surges observed in some of its peers. Consequently, Alphabet remains positioned as one of the most appealing and undervalued options within the realm of big tech.
As long as the price is above 130.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 139.79
- Take Profit 1: 143.00
- Take Profit 2: 150.00
Alternative scenario:
If the level of 130.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 130.00
- Take Profit 1: 125.00
- Take Profit 2: 120.00
