Source: PaxForex Premium Analytics Portal, Fundamental Insight
Alphabet has established itself as a dominant force in the stock market, boasting an impressive 338% increase in share value over the past decade. This growth surpasses benchmarks like the S&P 500 and the Nasdaq Composite, reflecting the company's resilience and potential for continued success.
With a market capitalization nearing $1.7 trillion, investors may question whether Alphabet remains a prudent investment choice. Here's why I believe it is.
A hallmark of a strong business is its consistent financial performance, and Alphabet exemplifies this trait. Over the last decade, the company has demonstrated remarkable growth, with revenue and diluted earnings per share (EPS) increasing at compound annual rates of 18.7% and 19.6%, respectively. This growth is fueled by Alphabet's strategic focus on sizable and expanding markets, leveraging scale advantages to its benefit.
Looking forward, there is reason for optimism regarding Alphabet's future growth prospects. Analysts' consensus estimates project a robust annualized revenue increase of 10.6% over the next three years, coupled with a 15.1% yearly growth in diluted EPS.
Alphabet's financial health is robust, highlighted by its impressive operating cash flow of $285 billion over the past three years alone. This substantial figure surpasses the market capitalization of many public companies, underscoring Alphabet's financial strength. With ample cash reserves exceeding $98 billion as of Dec. 31, the company is well-positioned to weather economic challenges while maintaining the flexibility to pursue growth opportunities aggressively. Additionally, Alphabet has consistently executed stock buybacks, reducing outstanding shares by approximately 10% in the past five years.
In summary, Alphabet stands out as a compelling investment option, backed by its track record of financial success, strong cash position, and strategic initiatives for future growth.
Alphabet stands as a formidable force in the digital landscape, commanding a vast array of widely used digital services across the globe. CEO Sundar Pichai aptly summarized this dominance by highlighting the company's impressive reach during the Q2 2023 earnings press release, noting its extensive user base across multiple products.
Foremost among Alphabet's offerings is Google Search, a cornerstone of its revenue stream, which continues to maintain a dominant position with over 90% market share globally. Despite the emergence o
of competitors like ChatGPT, Google Search remains unrivaled in its sphere.
Additionally, Alphabet boasts other flagship products such as Chrome, Android, and Gmail, each leading its respective category on a global scale.
Beyond these internet giants, Alphabet's portfolio includes other significant value drivers that contribute to its tech titan status.
YouTube, acquired for $1.7 billion in 2006, has evolved into a powerhouse, generating a staggering $31.5 billion in sales in 2023. Notably, it surpasses even Netflix in terms of TV viewing time in the U.S., benefiting from robust network effects.
Google Cloud, witnessing a 26% revenue growth in 2023, is on a trajectory of positive operating income. As the cloud market continues to expand rapidly, fueled by the shift to off-premises IT infrastructure, Google Cloud is poised for sustained growth.
Furthermore, Alphabet's investment in autonomous driving software through Waymo adds another dimension of potential long-term value.
Despite recent market fluctuations and a decline in share price since January 30th, presenting a buying opportunity for investors, Alphabet's forward price-to-earnings ratio of 19.7 suggests an attractive investment proposition.
In conclusion, Alphabet's diverse portfolio of digital services, coupled with its strong financial performance and strategic investments, positions it as a compelling investment choice with significant growth potential.
As long as the price is above 135.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 143.86
- Take Profit 1: 150.00
- Take Profit 2: 155.00
Alternative scenario:
If the level of 135.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 135.00
- Take Profit 1: 130.00
- Take Profit 2: 125.00
