As worries about a U.S. recession grow, how resistant is Google stock to a business slowdown compared to other tech companies? This is a very important question for investors who are looking at GOOGL stock.
With the bear market and Fed rate hikes, investors should be careful about making any purchases.
Alphabet’s (NASDAQ:GOOGL) technical ratings have gone down. On September 30, Google stock hit a 52-week low of 95.65.
At the “Made by Google” event on October 6, the company will show off new consumer devices. This could be a good thing for Google stock (NASDAQ:GOOGL). The Pixel 7 and Pixel 7 Pro phones, the Google Pixel Watch, and the new Nest home devices are all likely to be part of the new hardware.
The cloud computing division of Google (NASDAQ:GOOGL) holds its annual customer conference from October 11 to October 13.
Google Stock Split
Also, the Money 20/20 fintech conference will be held in Las Vegas from October 23 to Oct. Peeyush Ranjan will talk. He is the general manager of Google Pay and Next Billion Users.
Google wants to hire less because of the possibility of a recession. In a new project called “Simplicity Sprint,” Google’s CEO told workers to get more done. Google plans to shut down its Stadia gaming service in January to save money. In 2019, it started the Stadia streaming service.
After the market closed on July 15, the internet giant split its Alphabet shares in 20 ways for everyone it had before. Since the stock split, Google stock has dropped by almost 14%.
Alphabet’s earnings and revenue for the June quarter fell short of what Wall Street expected. This was because YouTube and its cloud computing business did not do as well as expected. But Google’s main business, digital advertising, grew by views.
During the second quarter, Alphabet bought back $15.19 billion worth of Google stock. This is up about 19% from the same time last year. Over the past year, Google has bought back $54.58 billion worth of its own stock.
Alphabet wants to grow its advertising business by using internet search for e-commerce. It also wants to challenge Amazon.com’s (AMZN) dominance in product search.
S&P 500 vs. Google Stock
Analysts say that Google’s internet search business will do better than other forms of advertising, such as social media.
Google’s new advertising platform is called Performance Max. It makes buying easy on YouTube, internet search, display, Discover, Gmail, and maps. With Performance Max, advertisers can control their campaigns across all of Google’s ad space. Google says that advertisers who use the tools turn more browsers into buyers.
In 2021, Google will finally do better than its high-tech peers, which used to be called “FANG” stocks. But the other FANGs, like Facebook’s parent company Meta Platforms (FB), Amazon, and Netflix (NFLX), have had a hard year because technology stocks are in a bear market.
Ggoogle stock jumped 65% in 2021. So far in 2022, Google shares have fallen by almost 34%, which is worse than the S&P 500. The S&P 500 has lost almost 25% of its value.
In the long run, the Google stock split could make it possible for the tech giant to join the Dow Jones Industrial Average. The stock of Google could be more appealing to small investors.
Google Stock: Hard to Compare to Last Year?
In 2022, when the coronavirus scare is over, it will be harder to compare the growth of Google stock from one year to the next.
Google has put off getting rid of internet cookies until 2024, which will help its advertising business in the short term. After putting off getting rid of third-party cookies on the Chrome web browser until 2023, Google now says it will put off getting rid of them until 2024. The cookies keep track of what people do on the web. Google will keep testing its “Privacy Sandbox” technology, which is a different way to show targeted ads.
Alphabet said at the beginning of 2022 that it expected its capital spending to go up by a “meaningful amount.” This was due to investments in computer servers in internet data centers and the building of office space.
GOOGL Stock: Skill with Artificial Intelligence
Most investors still know the company by its old name, Google, even though it changed its name to Alphabet in 2015. The restructuring split Google’s main business, which is internet advertising, from its “moonshots,” such as self-driving cars and the Verily Life Sciences unit.
Google’s quantum computing technology group became a separate company in March 2022.
Artificial intelligence is a strong point for Google stock in digital advertising, the Google Cloud Platform, YouTube, and consumer hardware. GOOGL stock is just one AI-related stock to keep an eye on.
At a Google developers conference in the middle of May, the company showed how AI tools are used in many of its products, such as Google Workspace, Google Maps, virtual reality, and voice-based searches.
GOOGL stock is no longer on the IBD Leaderboard after being there for a long time. The Leaderboard is a list of the best stocks chosen by IBD based on both technical and fundamental measures.
Big tech stocks are being hurt by regulations.
Since the Android mobile operating system is built into devices sold all over the world, the Play Store has helped increase sales.
In September 2021, a federal judge ruled that Apple (AAPL) must let mobile app developers direct users to outside payment methods. This was the result of a year-long court battle between Epic Games and Apple. The policies of Google are also being looked at.
Google said that its Play Store service fees would drop from 30% to 15% in 2021. The move hurt money coming in.
In October 2020, Google was sued by the Justice Department for unfair competition. The Justice Department said that Google hurt competition and customers by having a monopoly on the internet search and advertising related to the search. Because it has so much cash on hand, GOOGL stock has not been affected by the $9.3 billion in fines the European Union gave it for antitrust violations.
The Wall Street Journal said that Google has offered to split parts of its ad-tech business into a separate company under its parent Alphabet to avoid a second antitrust lawsuit from the Department of Justice.
One question involves Alphabet’s ability to make large acquisitions. Amazon has been busy buying up things. But Google may get more attention because of concerns about antitrust.
Google might try to buy Pinterest.
There has been talking that Google might buy Pinterest (PINS). Bill Ready, a top digital payments manager at Google, was named Pinterest’s CEO at the end of June.
At the Code Conference in Los Angeles in early September, the subject came up. But Brad Erikson, an analyst at RBC Capital, said in a recent note that it is unlikely that Google will try to buy Pinterest.
“A deal is possible and makes sense in theory, but it seems unlikely in this case because PINS’ new CEO just started, and we think that letting PINS go it alone would be better for PINS shareholders than a buyout.”
He also said, “We don’t think PINS shareholders would be happy with such a result, given the bull thesis that building a marketplace like ETSY to unlock a lot of value in the ad business would be much better for the stock price in the long run than a GOOGL buyout in the short term.”
More Openness: Google Stock
When it comes to advertising for internet searches, Amazon is taking the market share away from Google.
Larry Page stepped down as Alphabet’s CEO in December 2019. Pichai, who was in charge of Google, took his place. Sergey Brin, who helped start Google, gave up his job as president of Alphabet.
Google has become more open since Sundar Pichai became the new CEO of Alphabet. In fiscal 2020, Google’s fourth-quarter report was the first time it talked about how cloud computing affected its finances. The cloud business hasn’t made any money yet.
Also, nobody knows how much money YouTube makes.
Even though Google invests a lot in data centers for cloud computing, AI, YouTube, and consumer products, its overall profit margins are still a problem.
GOOGL Stock: A Recession in the U.S.?
In spite of worries about a possible U.S. recession, Google’s results for the second quarter were better than expected.
Alphabet said that its earnings per share fell by 11% to $1.21. Gross sales grew by 16% to reach $69.7 billion. Analysts thought that Google would earn $1.27 per share and bring in $69.62 billion. A year ago, Google made $1.36 per share and had $61.9 billion in sales.
At the same time, advertising revenue went up 11% to $56.29 billion, which was just above the $55.97 billion that was expected.
But YouTube’s income only went up by 5%, to $7.3 billion. Analysts thought that YouTube would make $7.52 billion from ads, which is a 7% increase. From 14% in the first quarter, YouTube’s sales growth slowed.
Google’s cloud-computing sales went up 36% to $6.28 billion, which was less than the $6.41 billion that was expected. The operating loss for the cloud unit went from $591 million the year before to $858 million.
Google repurchased $12.8 billion of its own stock in the second quarter. The company bought back $13.3 billion worth of Google stock in the first quarter.
Waymo’s Business with Self-Driving Cars
A key question for investors is how much should Google’s self-driving-car project Waymo and “Other Bets,” such as the Verily Life Sciences unit figure into valuation.
At the beginning of 2018, some analysts thought that Waymo would be worth anywhere from $75 billion to $125 billion in the long run. But recently, people’s hopes for self-driving cars have been lowered.
Waymo, in early March raised $2.25 billion in funding from outside investors. including Silver Lake, the Canada Pension Plan Investment Board, and Mubadala, the investment arm of Abu Dhabi’s government.
Google didn’t say how much it thought Waymo was worth during the funding round, but reports said it was only $30 billion.
Waymo CEO John Krafcik, who had been in charge of the self-driving car unit since 2015, quit at the beginning of April. Alphabet said that Tekedra Mawakana and Dmitri Dolgov would take over as co-CEOs in his place. Waymo’s chief operating officer was Mawakana, and its chief technology officer was Dolgov.
Waymo and Geely, a company from China, announced a new partnership in December. They plan to work together in a self-driving van with the Zeekr brand.
How well does Google’s hardware business do? That’s another question. It competes with Apple in the smartphone market and Amazon in the smart-home appliance market.
Acquisitions in the Cloud, Hardware, and Security for GOOGL Stock
Also, Google’s purchase of Fitbit, a company that makes smartwatches, came to an end in January. Analysts say that the $2.1 billion purchase could help Google enter the health and fitness market.
In May, at a conference for software developers called “I/O,” Google said that Pixel watches coming out in late 2022 will use technology from Fitbit.
Amazon and Microsoft, on the other hand, are tough competitors for Google’s cloud computing business (MSFT). Google brought in Thomas Kurian, a former Oracle (ORCL) executive, to improve performance in the corporate market.
Bulls say Google Cloud Platform is taking share as it focuses on security, open source software, and data analytics.
In 2019, Google purchased data analytics firm Looker for $2.6 billion in cash. Santa Cruz, Calif.-based Looker’s analytics platform uses business intelligence and data visualization tools.
Analysts say Google could buy more companies to grow its cloud business. Google acquired cybersecurity firm Mandiant (MNDT) for $23 per share in an all-cash $5.4 billion deal.
Mandiant provides cyber-incident response and cybersecurity testing services. The year before, FireEye broke off from Mandiant. Mandiant is part of Google’s cloud computing business.
UBS thinks that Google Workplace business productivity tools will help the cloud computing unit in the enterprise market.
The Google Workspace productivity tools have more than 3 billion monthly active users globally and more than 8 million paying customers, Google said at the Goldman Sachs Communacopia conference.
Is it a good time to buy Google Stock?
Meanwhile, Google’s Relative Strength Rating is only 30 out of the best possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google stock owns an Accumulation/Distribution Rating of E. This rating looks at how the price and volume of a stock have changed over the past 13 weeks.
The rating, on an A+ to E scale, measures the institutional buying and selling of stock. A+ signifies heavy institutional buying; E means heavy selling. Think of a C as being in the middle.
GOOGL stock holds an IBD Composite Rating of 55 out of the best possible 99.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Stocks with a Composite Rating of 90 or higher are the best ones for growth.
As of October 1, GOOGL stock is not in a zone where you should buy it. This is because the tech sector is volatile. It needs to forge a new base to be actionable.
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