3 Factors Driving Alphabet Stock’s Growth

Alphabet Stock

Alphabet’s (NASDAQ:GOOGLE) stock is highly favored by long-term growth investors due to several key factors.

Firstly, Alphabet’s core Google business, known for its dominance in online search, is a major draw for investors. The company’s consistent profitability and strong cash flow growth make it a stable investment choice among Big Tech stocks.

Secondly, Alphabet has been proactive in embracing AI and machine learning technologies. Projects like TensorFlow have enhanced its core offerings, leading to improved user experiences and increased engagement.

Thirdly, there is speculation about a potential partnership between Apple and Alphabet. Reports suggest that Apple is in talks to integrate Alphabet’s AI technology, Gemini, into its devices. While the outcome of these negotiations is uncertain, they highlight the significance of Gemini in the AI landscape.

Additionally, Alphabet’s Google Cloud division is leveraging machine learning to provide AI services to developers and enterprises. BigQuery, its data warehouse, now integrates advanced ML capabilities, enabling the analysis of a vast amount of data per second. This has significantly contributed to the division’s revenue growth, solidifying Alphabet’s position in the machine learning sector.

Analysts are bullish on GOOG stock, with Wedbush raising its target price from $160 to $175 and giving it an “outperform” rating. Despite trailing behind competitors like Amazon and Microsoft in the cloud market, Alphabet’s potential in generative AI is seen as a significant driver of future growth.

Furthermore, Alphabet’s partnership with Apple, particularly its status as the default search engine on iPhones, has been lucrative. However, talks of licensing Alphabet’s AI models to Apple could potentially change this dynamic, impacting Google’s traffic and ad revenue from iPhones.

Despite facing initial setbacks with its Gemini AI chatbot, Alphabet remains a major player in the AI race. Negotiations with Apple hold promise, but antitrust concerns could complicate any potential deal.

In conclusion, Alphabet’s stability in its core business and its growth potential in AI and machine learning make it an attractive option for investors at its current valuation.

Featured Image: Megapixl

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.