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19 hours ago
Alphabet (GOOGL) Stock Pops After AI Boosts Results
By: Schaeffer's Investment Research | October 30, 2024
• Alphabet stock is surging after beating third-quarter earnings estimates
• The stock's options pits are brimming with higher-than-usual activity today
Shares of Google parent Alphabet Inc (NASDAQ:GOOGL) are on the rise today, after the tech giant beat third-quarter earnings and revenue expectations following a 35% rise in cloud revenue. The company's cloud division saw a boost from artificial intelligence (AI) buzz, which has, of course, been a long-term focus. In his remarks, CEO Sundar Pichai said AI investments are "paying off."
At last glance, GOOGL was up 5.6% at $179.20, earlier as high as $182.02, with the stock jumping $150 billion in value straight out of the gate. Today's bull gap has shares breaking above the $170 level, which acted as pressure since early August, after they yesterday closed above the 100-day moving average for the first time since then. Year to date, the equity is up 28.3%.
The stock's options pits are buzzing even more than usual today, with 357,000 calls and 171,000 puts exchanged so far -- more the double the usual daily volume. The weekly 11/1 180-strike call is the most popular, with new positions opening there.
This bullish-leaning sentiment amongst options traders isn't unusual, as calls have been much more popular than puts over the last 10 weeks. This is per GOOGL's 50-day call/put volume ratio of 2.98 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than all other readings from the past year.
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4 weeks ago
Alphabet (GOOGL) Stock Attracts Bullish Coverage on Valuation
By: Schaeffer's Investment Research | October 1, 2024
• Options are affordably priced as well
• Call traders are chiming in as well
Pivotal initiated coverage of Alphabet Inc (NASDAQ:GOOGL) with a "buy" rating, noting the Google parent's “attractive valuation in any realistic scenario.” GOOGL was last seen trading near breakeven at $165.97.
The shares pulled back after hitting a July 10, record high of $191.75 to their lowest level since March, but have since bounced to conquer their 40-day moving average. While the $168 region has been acting as a ceiling since late August, GOOGL sports a 20.3% year-to-date lead.
Calls have been much more popular than usual. This is per GOOGL's 10-day call/put volume ratio of 3.10 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 93% of readings from the past year.
Drilling down to today's options activity, 62,000 calls and 24,000 puts have already traded hands, which is triple the volume typically seen at this point. The most popular contract by far is the weekly 10/4 170-strike call, with new positions currently being opened there.
Options are attractively priced. This is per Alphabet stock's Schaeffer's Volatility Index (SVI) of 24% that ranks in the relatively low 20th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment.
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DiscoverGold
2 months ago
Alphabet (GOOGL) Turns Twenty
By: Bespoke Investment Group | August 19, 2024
Twenty years ago to the day, the company running the world's largest search engine went public. On August 19th, 2004, Alphabet (GOOGL) shares IPO'd at a split-adjusted price of $2.13. In the 20 years since, the stock has been a top performer in many aspects. Simply looking at the top line, revenues have exploded from $512 million in Q4 2003 to $84.7 billion in the latest quarter. Given its rise to become one of the six "trillion dollar market cap" companies, the stock has ripped higher an astounding 7,669% from its IPO price.
So how has Alphabet done in the 20 years since it went public versus other big winners in the stock market? Below is a look at the 30 stocks currently in the S&P 500 that are up the most over the last 20 years. As shown, these 30 names are all up more than 3,000% since GOOGL's IPO, and GOOGL ranks as the 11th best. Unsurprisingly, the single best stock by a huge margin is NVIDIA (NVDA) with a gaudy 127,418% gain, but other mega-caps like Apple (AAPL) and Amazon (AMZN) have both put up better numbers than GOOGL as well. Additional names that have done better than GOOGL include Netflix (NFLX) with a 30,000%+ gain, Monster Beverage (MNST), Booking Holdings (BKNG), Intuitive Surgical (ISRG), Regeneron (REGN), Deckers Outdoor (DECK), and Salesforce (CRM).
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3 months ago
Antitrust Scrutiny Pulls Put Traders to Alphabet Stock
By: Schaeffer's Investment Research | August 14, 2024
• The Department of Justice (DOJ) is considering breaking up Alphabet
• A court ruled the company monopolized the online search market
The Department of Justice (DOJ) is considering breaking up Big Tech titan Alphabet Inc (NASDAQ:GOOGL), after a court ruling determined the company monopolized the online search market, per a Bloomberg News report. This comes amid Alphabet's Pixel phone launch, which showcased its Gemini technology and positioned it as a leader in bringing artificial intelligence (AI) to smartphones.
GOOGL was last seen down 1.2% to trade at $162.20, after a rally off the 180-day moving average fell short of the $165 level. The stock has pulled back significantly from its July 10, all-time high of $191.75, but despite its 10.4% quarter-to-date deficit, it still sports a 16.8% lead for 2024.
Over at International Securities Exchange (ISE), Cboe Volatility Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GOOGL's 50-day put/call volume ratio sits higher than 97% of readings from the past year. This indicates traders have been more bearish than usual.
Drilling down to today's options activity, 54,000 puts have already crossed the tape, which is double the intraday average volume. The most popular contract is the August 160 put.
It's also worth noting the Alphabet stock sports affordably priced premiums. This is per the equity's Schaeffer's Volatility Index (SVI) of 25% that ranks higher than just 21% of annual readings.
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3 months ago
When You Look Back in 5 Years, You'll Wish You'd Bought This $2 Trillion Artificial Intelligence (AI) Stock
By: The Motley Fool | July 31, 2024
• When You Look Back in 5 Years, You'll Wish You'd Bought This $2 Trillion Artificial Intelligence (AI) Stock
Alphabet is one of the cheapest megacap technology stocks, despite being a leader in AI.
Alphabet (GOOG 0.75%) (GOOGL 0.73%) is the technology conglomerate behind Google, YouTube, autonomous driving company Waymo, and artificial intelligence (AI) developer DeepMind (to name just a few of its subsidiaries).
Google remains the dominant internet search engine globally, and it used that success to build other businesses like Google Cloud and Google Workspace (which includes Gmail and Google Docs). But as the window to the internet for over 20 years, Google Search is also a repository of some of the most valuable data in cyberspace, which gives Alphabet an incredible edge in the AI race.
Alphabet is already generating billions of dollars in revenue from AI specifically, and the best is probably yet to come. Its stock is very cheap based on one widely used valuation metric, and when investors look back on this moment in five years, they might wish they had bought it today.
Alphabet is weaving AI throughout its entire business
Google has a 91% global market share in the internet search industry, but it came under threat last year following the rapid adoption of OpenAI's ChatGPT. AI-powered chatbots can provide direct answers to almost any question, creating a more convenient experience compared to Google Search, which requires the user to sift through webpages to find the information they need.
It prompted Alphabet to launch its own family of AI models called Gemini, which power a new Google Search feature called AI Overviews. Overviews speed up the search experience by delivering text-based responses at the top of Google's traditional web results. They include reference links so the user can view the source of the information, and Alphabet says they are receiving more clicks than the links that appear in traditional search results. That could have positive implications for advertising revenue when AI Overviews roll out more broadly.
Gemini is also available in Google Workspace for an additional monthly subscription fee. It integrates into productivity applications like Google Docs, Sheets, Slides, and Gmail, allowing users to rapidly create content and speed up their workflows. One Workspace customer, Click Therapeutics, is using Gemini to analyze patient feedback to build digital treatment plans, and the use cases will likely expand further over time.
Google Cloud is another critical component of Alphabet's AI strategy. Like most top cloud providers, Google Cloud offers AI data center infrastructure fitted with chips from leading suppliers like Nvidia. However, Alphabet also designed its own chips in-house, and its new Trillium tensor processing unit (TPU) delivers 5 times more compute performance than the previous version.
Developers use that computing power to perform AI training and inferencing to deliver the most advanced AI models, so faster chips can translate into cost savings and higher-quality outcomes. Google Cloud also offers a library of ready-made large language models (LLMs), including Gemini, which developers can use to accelerate the creation of their applications.
Google Cloud just crossed a noteworthy milestone
Alphabet generated a record $84.7 billion in revenue during the second quarter of 2024 (ended June 30), a 14% increase from the year-ago period. Google Search remained the dominant part of the conglomerate, accounting for more than half of that revenue.
Google Cloud was the standout performer, though, because its sales grew by 29% to $10.3 billion. It was the first time the segment crossed the $10 billion mark, and AI played a key role in achieving that milestone. Alphabet said its AI infrastructure and solutions have already generated billions of dollars in revenue to date, with over 2 million developers currently using them.
Both of those numbers are likely to rise in the future as more businesses integrate the technology into their day-to-day operations.
Alphabet continues to carefully manage its costs to drive profitability. Its total operating expenses ticked up 8.6% during Q2, and since that was much slower than the pace of its revenue growth, more money flowed to the bottom line. As a result, the company's earnings per share soared 31% year over year to $1.89.
Capital expenditures are one thing investors are watching closely, because building AI infrastructure is incredibly expensive. Alphabet spent $13 billion on capital expenditures during Q2, and it expects to spend at least $12 billion per quarter for the rest of 2024. The company warned this could temporarily pressure its profit margins, but the long-term payoff from having more AI capacity could outweigh any short-term negatives.
Alphabet stock is cheap
Alphabet generated $6.97 in earnings per share over the last four quarters, and based on its stock price of $167.28 as of this writing, it trades at a price-to-earnings (P/E) ratio of 24. That is a 24.7% discount to the Nasdaq-100 index, which has a P/E ratio of 31.9, implying Alphabet is heavily undervalued compared to its big-tech peers.
Alphabet's P/E ratio is also the cheapest among every other company with a valuation of at least $2 trillion:
PE RATIO DATA BY YCHARTS
Nvidia, Microsoft, and Apple trade at an average P/E ratio of 45.2. That number is heavily skewed by Nvidia, so I'm not suggesting Alphabet stock will climb that high. However, it might be appropriate for the stock to rise 45% to trade in line with the average P/E ratio of Microsoft and Apple, which is 35.
After all, Alphabet's earnings growth of 31% during Q2 was substantially faster than what both Microsoft (8.9%) and Apple (13.5%) are forecast to deliver in their upcoming quarters. Plus, Alphabet might have an edge over both companies in the AI space, because they rely heavily on third-party developers like OpenAI for their AI software.
Simply put, besides the fact Alphabet is generating strong growth already with promising long-term potential thanks to AI, there is a clear case its stock should be trading much higher based on the valuations of some of its peers in the tech industry.
Therefore, when investors look back on this moment a few years from now, they might be glad they scooped up Alphabet shares at the current price.
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