Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 25 Feb, 25 | GOOG | Buy | USD 181.19 | USD 194.0 | USD 201.0 | 31 days | 10.9% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.
Profitability Surge – Net income grew by 28% to $26.54 billion, while diluted earnings per share (EPS) increased 31% to $2.15. The operating margin also expanded from 27% to 32%, reflecting improved efficiency.
Strong Revenue Growth – Alphabet reported a 12% year-over-year increase in consolidated revenue, reaching $96.5 billion in Q4 2024. This growth was primarily driven by increases in Google Services and Google Cloud revenues.
Increased Capital Expenditures – Alphabet’s capital expenditures rose significantly, from $32.25 billion in 2023 to $52.54 billion in 2024, reflecting heavy investment in AI and infrastructure, which could pressure short-term cash flow.
Decline in "Other Bets" Revenue – Revenue from Alphabet’s “Other Bets” segment dropped from $657 million in Q4 2023 to $400 million in Q4 2024, indicating weaker performance in its experimental and emerging business units.
Key investment risks for Alphabet include increasing regulatory scrutiny on digital advertising and AI, heightened competition in cloud computing, potential declines in ad revenue due to economic downturns, and rising capital expenditures that may impact short-term profitability.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 181.19 | 157.64 | 194.0 | 201.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Alphabet Reports Strong Financial Performance in Q4 2024: Alphabet Inc. announced its financial results for the fourth quarter and fiscal year 2024, reflecting robust growth across its business segments. The company reported a 12% year-over-year increase in consolidated revenue, reaching $96.5 billion for the quarter. This growth was primarily driven by strong performance in Google Services, YouTube advertising, and Google Cloud. Sundar Pichai, CEO of Alphabet, highlighted the company's leadership in artificial intelligence (AI) and its impact on product development, cloud services, and user engagement.
Growth in Google Services and Cloud Segments: Google Services revenue experienced a 10% increase, totaling $84.1 billion in Q4 2024. This growth was fueled by Google Search, YouTube advertisements, and an expanding suite of subscription-based products. Meanwhile, Google Cloud revenue surged by 30% to $12.0 billion, led by strong demand for its AI infrastructure and generative AI solutions. The performance of these key business segments underscored Alphabet’s continued dominance in the digital advertising and cloud computing industries.
Profitability and Operational Efficiency Improvements: Alphabet demonstrated notable improvements in profitability, with total operating income rising 31% to $30.97 billion and operating margins expanding by 5 percentage points to 32%. Net income saw a 28% increase, reaching $26.54 billion, while diluted earnings per share (EPS) grew by 31% to $2.15. These results reflect the company’s commitment to operational efficiency, technological advancements, and disciplined financial management.
Strategic Investments and AI Innovation: Alphabet continues to prioritize AI innovation, leveraging its advanced technology across various products and services. The company introduced AI-driven features such as AI Overviews and Circle to Search, enhancing user experiences in Google Search. Additionally, AI-powered solutions contributed to the rapid expansion of Google Cloud. To further accelerate growth and technological advancements, Alphabet plans to invest approximately $75 billion in capital expenditures in 2025.
Dividend Program and Shareholder Returns: In Q4 2024, Alphabet introduced a dividend program, distributing a total of $2.4 billion to stockholders across Class A, Class B, and Class C shares. This move signifies the company’s focus on enhancing shareholder value while maintaining a strong financial position. Alphabet also continued its stock repurchase program, reinforcing its confidence in long-term growth and profitability.
Financial Stability and Future Outlook: Alphabet maintains a solid financial position with total assets increasing to $450.26 billion as of December 31, 2024. Despite macroeconomic challenges, the company remains confident in its long-term strategy, emphasizing AI-driven innovation and cloud expansion. Alphabet’s diversified revenue streams, coupled with its strategic investments, position the company for sustained growth in the evolving digital landscape.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Alphabet Inc. Class C (NASDAQ: GOOG) at the closing market price of USD 181.19, as on February 24, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Communication Services Industry: Internet Content & Information
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| GOOG Alphabet Inc Class C |
3.05 1.95% | 159.28 | 27.01 | 23.42 | 6.41 | 6.99 | 6.14 | 19.27 |
| GOOGL Alphabet Inc Class A |
2.75 1.78% | 157.39 | 26.81 | 23.20 | 6.41 | 6.92 | 6.14 | 19.27 |
| META Meta Platforms Inc. |
12.20 2.12% | 588.56 | 27.55 | 25.32 | 9.67 | 8.52 | 9.46 | 21.61 |
| TCTZF Tencent Holdings Ltd |
- -% | 64.00 | 13.50 | 14.64 | 0.64 | 3.44 | 0.64 | 1.54 |
| TCEHY Tencent Holdings Ltd ADR |
0.71 1.11% | 64.55 | 13.51 | 14.66 | 0.65 | 3.45 | 0.64 | 1.54 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 24,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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