Source: PaxForex Premium Analytics Portal, Fundamental Insight
In 2023, Alphabet's shares experienced a significant surge, jumping by 58%, a stark contrast to its 2022 performance when the stock plummeted by 39%, as reported by S&P Global Market Intelligence. The company's rebound was attributed not only to the overall economic improvement but also to Alphabet's strategic venture into artificial intelligence (AI), a development that garnered considerable investor enthusiasm.
The preceding bear market of 2022 adversely impacted Alphabet's stock, primarily due to a decline in digital advertising, which constitutes a substantial portion of Google's revenue. The economic challenges led businesses to cut marketing budgets, affecting Alphabet, a leader in online advertising, more severely than others.
The economic upturn in 2023 prompted marketers to increase ad spending, contributing to Alphabet's recovery. However, it was the integration of AI into the company's operations that propelled its stock performance. While Alphabet has a history of utilizing AI algorithms for enhancing search accuracy, refining digital advertising targeting, and supporting autonomous systems like Waymo self-driving cars, the emergence of generative AI marked a transformative moment. This branch of AI demonstrated capabilities such as creating original content, summarizing emails, drafting responses, making presentations, data searches, and even coding.
Although Microsoft's collaboration with OpenAI's ChatGPT played a role in sparking the AI revolution, Alphabet responded swiftly. Despite an initial stumble with its Bard chatbot, Google rebounded, integrating AI into various facets of its operations. AI-powered enhancements were introduced in Gmail, Google Docs, Google Slides, and plans were unveiled to incorporate new AI-driven features into its search functionality.
A pivotal advancement for Google emerged with the introduction of generative AI tools on Google Cloud. The recent unveiling of Gemini AI marked a significant milestone, touted as the company's "largest and most capable AI model" surpassing GPT-4, the foundation for ChatGPT, with a fivefold increase in computational power.
Gemini underwent rigorous testing across various skills, excelling in audio and video understanding, natural image comprehension, and mathematical reasoning. Notably, it outperformed existing benchmarks in 30 out of 32 widely used academic benchmarks for large language models (LLM) research and development. Achieving a remarkable 90% in massive multitask language understanding (MMLU), Gemini became the inaugural generative AI model to surpass human expert performance using this standard.
Coupled with the positive economic trajectory and Alphabet's strategic venture into generative AI, the outlook for 2024 appears promising. Projections indicate the potential size of the AI market ranging from $2.6 trillion to $4.4 trillion annually, according to McKinsey Global Institute data. With Alphabet's dominant position in search and digital advertising, the company seems well-positioned for success in 2024. In summary, Alphabet stock is confidently recommended as a strategic investment choice.
As long as the price is above 141.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 149.88
- Take Profit 1: 154.00
- Take Profit 2: 160.00
Alternative scenario:
If the level of 141.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 141.00
- Take Profit 1: 138.00
- Take Profit 2: 135.00
