The Google stock price has soared to the highest level on record, continuing a trend that started when it went public. GOOG has jumped by 35% in the last 12 months, underperforming other companies in the Magnificent 7 group. The Roundhill MAG 7 ETF (MAGS) has jumped by almost 65% in the same period. So, is Google the biggest bargain in the Magnificent 7?
Alphabet stock is cheap compared to peers
Google has a market cap of over $2.43 trillion, making it one of the biggest companies in the world. Yet, it is a bargain, especially compared with the other companies in the Magnificent 7.
Google has a forward PE ratio of 25, while Apple, a company whose growth has stalled has a multiple of 30. Microsoft has a multiple of 32, while Netflix has 37, and Tesla, Amazon, and Nvidia have 200, 44, and 50.
Google’s valuation compared to its peers would imply that the company is going through major challenges and is no longer growing. It would also be a sign that it has lost market share across its business lines.
Google is indeed going through a big challenge as the US government considers breaking it up for having a major market share. The company is also facing substantial competition from AI companies like Anthropic, OpenAI, and Perplexity.
However, the reality is that Alphabet’s business is thriving as its revenue growth has accelerated. It made over $161 billion in 2019 to $307 billion in 2023. Analysts expect its 2024 revenue to be $350 billion, followed by $390 billion in 2025. Google has a long history of doing better than analyst estimates, and I will not be surprised if it hits $400 billion this year.
Google has also become a highly profitable company, with its net income growing from $34.3 billion in 2019 to $94 billion in the trailing twelve months.
Google revenue growth is continuing
The most recent third-quarter results showed that Google’s revenue jumped to over $88 billion. Its search revenue soared from $44 billion to $49 billion, while YouTube made $8.9 billion. Google Cloud made $11 billion, while services had $76 billion.
All these divisions will likely keep growing because of Google’s dominance. There are little odds for another search engine to dominate Google in the search industry. Also, YouTube has a wide moat that is impossible to disrupt.
Google Cloud is where the company has struggled to compete with its top peers like Microsoft and Amazon. Still, being the third-biggest cloud computing company is a good thing since it has more ground to gain.
The upcoming results, scheduled for February 4, will be highly important for the Google stock as they will provide more color about its growth. Analysts expect these numbers to show that Alphabet made over $96 billion in the fourth quarter, a 12% increase from the same period in 2023.
Google stock price analysis
The weekly chart shows that the Google share price has been in a strong uptrend in the past few months. It has formed an ascending channel that connects the lowest and highest swings since January 2023.
The stock has moved above all moving averages, while the MACD and the Relative Strength Index (RSI) have all pointed upwards.
Google has just crossed the important resistance point at $192, its highest swing on July 8, invalidating the double-top pattern.
Therefore, the Alphabet share price will likely continue rising as bulls target the next key milestone at $300.
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