Alphabet (NASDAQ:GOOGL) is once again an exciting company. The company’s stock dropped by almost 48% from its highest point to its lowest point. But the stock has made a come back of 25%, which shows it has hit a long-term bottom near the $80 support level.
Early in February, Google stock hit an all-time high and has been going down. Recently, the stock fell close to $80, the lowest it had been in more than two years. But since the lows, the stock has risen a lot, and now that it’s above $100, the bottom should be in. Now, Google’s losses are likely to be limited, especially compared to the stock’s long-term prospects. The company has a good chance of making money and steadily growing its sales. Google’s value has also decreased, so it’s now possible to buy the company. As soon as the temporary slowdown is over, Google’s revenue growth should level off and improve. This should lead to much higher profits and a much higher stock price.
Google Is the Most Popular Mobile Search Engine in the World
Google controls 96.4% of the very profitable global search market. Google has about 92.4% of the global search market “across all platforms.”
Google’s ads continue to bring in most of the company’s money, making up about 80% of total revenue. Total sales for the fourth quarter were $69.1 billion, a 6% increase from last year. Even with the temporary slowdown, it’s clear that Google is still making more money.
Even though the economy is not doing well, Google’s main ad business is growing. This is a good sign because it shows that growth will start again once the temporary slowdown is over. Also, we see strong growth in Google’s Cloud business, which is growing. Cloud sales went up by 38% from one year to the next. Google’s growing cloud business should continue to grow at a double-digit rate for several years, which will help the company’s future earnings potential.
Only AWS and Azure services are ahead of Google in the cloud. But this doesn’t change the fact that Google has a considerable market share and a lot of room to grow. On the other hand, Google Cloud has every chance to progress and increase its share of the lucrative global cloud market. This year, Google’s cloud business is expected to bring in around $25 billion; by 2025, that number could double to approximately $50 billion. Even though ad revenues are temporarily slowing down, Google Ads should recover and return to healthy double-digit growth in the coming years.
Revenue Projections
Google is worth less than five times its sales and about three times what it is expected to make in 2025. Also, sales estimates have decreased over the past year, which could mean that Google’s revenue growth potential has been underestimated. Growth will likely be between 10 and 12%, but Google’s sales could grow by 12 to 15% in the coming years.
Earnings per Share Estimate
Recent quarters have seen EPS estimates drop by a lot. This year, Google could earn $5 per share and between $6 and $7 per share in 2023. This change brings Google’s P/E ratio down to 20, and its possible forward P/E ratio is now just 15. Google has no competition in the search ad market, and it should continue to grow its influence, which will bring in much more money in the years to come.
Also, Google Cloud should continue to grow, which will help it bring in more money and make more money in the future. Google’s stock will likely hit a long-term bottom around $80, and any pullbacks below $100 are good times to buy. Also, Alphabet’s stock is expected to go through the roof in the years to come.
Google’s revenue growth is not slowing down much, and things should get better once the temporary slowdown is over. Because of this, Google’s income could almost double between 2027 and 2028. As the economy gets better, Google should start making more money again. If EPS grows by 15% to 20%, it should be able to reach $20 by 2030. We also won’t see a forward P/E ratio of 15-20 for Google for very long. The company’s P/E multiple should go up, and in the next few years, it could reach 20 to 25. Because of this, Google stock price should go up as the company grows. My reasonable price goal for Alphabet in 2028 is between $400 and $500.
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