Alphabet Inc. NASDAQ (Google stock): GOOGL and GOOG is a major player in the stock market. It is headquartered in Mountain View, California. Google is the world’s second-largest tech company by revenue, following Apple.
Alphabet was established on October 2, 2015, through a restructuring of Google. It became the parent holding company for Google and several former Google subsidiaries. It is also one of the Big Five U.S. tech giants alongside Amazon, Apple, Meta, and Microsoft.
Alphabet Inc. was created to streamline Google’s core operations. This made the business ‘cleaner and more accountable.’ It also allowed more independence for businesses outside of Internet services.
In December 2019, Google co-founders Larry Page and Sergey Brin stepped down from their executive roles. They appointed Sundar Pichai as CEO of both Google and Alphabet. Page and Brin continue to serve as Alphabet employees, board members, and controlling shareholders.
Impact of Gen AI
The potential impact of generative artificial intelligence on Google’s search advertising business is a major concern for investors. Additionally, antitrust lawsuits filed by the Department of Justice have placed pressure on Google’s stock.
Amid Donald Trump’s victory in the 2024 Presidential election, some have speculated about the future of antitrust cases involving Google. They believe a Trump-led Department of Justice (DoJ) could adopt a different approach.
This shift in strategy is due to Trump’s potential stance on big tech companies. Many think that his administration might prioritize business interests over regulatory actions.
Consequently, the DoJ may alter its tactics in handling the ongoing cases. This could lead to significant changes in how Google is treated legally.
This speculation arises from the belief that the new administration may prioritize settlement over litigation. Consequently, such a shift could influence the trajectory of these high-profile legal battles, particularly regarding Google’s market dominance.
Specifically, it is believed that the new administration could be more inclined to reach a settlement. This shift in strategy might stem from political considerations, signaling a potential departure from the previous administration’s stance.
Consequently, such a change could impact the future of antitrust enforcement in the tech industry. This would contrast with the approach taken by the Biden administration.
Despite these challenges, Google stock has gained 27% in 2024. From a technical view, GOOGL stock has formed a new cup-with-handle pattern, indicating potential for further growth. The stock remains above its21-day exponential moving average and 50-day line.
Google’s “AI Overviews” gains traction
Artificial intelligence is becoming crucial for investors with Google’s ‘AI Overviews’ highlighting Alphabet‘s (GOOGL) third quarter earnings report, supporting optimism that Alphabet can hold its own in the competitive AI market competition.
On October 31, generative AI startup OpenAI launched its long-awaited ChatGPT web search, positioning it as a direct competitor to Google. This latest version of the AI chatbot enables users to search real-time information across the internet, through partnerships with third-party search providers.
Alphabet, however, is stepping up its game. In December, the company is set to introduce “Jarvis,” an AI tool designed to complete tasks using web browser information.
The Jarvis tool will be able to take over a person’s web browser to complete tasks such as conducting research, purchasing a product or booking a flight. AI startup Anthropic has also announced a similar product.
AI Overviews drive growth amidst legal challenges
In its Q3 earnings report, Alphabet (GOOGL) showed promising results from using AI in its core search advertising business. Since mid-May, Google has rolled out AI Overviews in the U.S., adding conversational summaries at the top of search results for queries.
This feature, powered by Google’s in-house Gemini AI model, has helped boost traffic and click-through rates, especially among younger users.
However, Alphabet continues to face ongoing legal challenges. On October 7, a U.S. District Court judge ruled that Google must allow third-party app stores, including the Epic Games Store, onto Google Play.
The ruling requires Google to ensure app availability across stores and not require the use of Alphabet Play billing. This decision by U.S. District Judge James Donato follows a December 2023 jury finding that Google’s Android platform has a monopoly in app distribution and in-app billing. Google plans to appeal the ruling.
Is the Apple search deal at risk?
The Justice Department has informed a federal judge that it may ask for a breakup of Google as a possible antitrust remedy.
On August 5, a federal judge ruled that Alphabet violated antitrust laws, using unfair tactics to dominate the internet search advertising market. A central part of the government’s case is Alphabet’s $20 billion annual payment to Apple (AAPL) to keep Google as the default search engine on iPhones.
A second phase of the trial will determine possible remedies. In a worst-case outcome, the Apple search deal could be terminated, analysts suggest. A final ruling is expected by August 2025, though Google is likely to appeal.
Google faces new “DoubleClick’ ad antitrust case
Another anti-trust lawsuit against Google, known as the “DoubleClick trial” began on Sept. 9. In 2008, Google acquired a leading digital advertising firm DoubleClick for $3.1 billion. The DoJ argues that Google’s dominance of the digital ad market has harmed advertisers and content creators. Testimony ended in late September with closing arguments scheduled for November 25.
The case, along with other antitrust cases, are likely to move forward. While some analysts highlight lower trading multiples for GOOGL stock, Alphabet still has key strengths, including Waymo, which is recognised as a leader in autonomous vehicles. In October, Waymo raised $5.6 billion in funding from Alphabet and previous investors.
AI search outlook
As generative AI gains momentum, there’s ongoing debate about whether Google is still a tech leader or falling behind startupOpenAI. Google stock remains one of the key AI stocks to watch.
OpenAI continues to push ahead, releasing a new language model (LLM) withbetter reasoning abilities and attracting more investors.
In response, Google is countering Microsoft’s investment in OpenAI by offering its own generative AI tools, including the Gemini language model for developers.
Additionally, Google stock benefits from the Performance Max advertising platform, which automates ads across YouTube, internet search, display, Gmail, maps and other applications. Google claims advertisers using these tools see better conversion rates.
In a major shift, Alphabet has decided to keep consumer tracking technology known as “cookies” in its Chrome browser, allowing users to decide whether to turn them on or off.
Alphabet stock: Cloud computing
Beyond Google’s core internet search advertising business, analysts see growth in YouTube and cloud computing as essential to Alphabet’s future. Another area of focus is Google’s hardware business, where it competes with Apple in the smartphone market.
Google is working to slow TikTok’s growth with its own short video platform, YouTube Shorts. With 70 billion daily views, how much revenue Shorts generates will be a key factor for 2024, according to analysts.
In cloud computing, Google remains the third largest provider, behind Amazon.com (AMZN) and Microsoft. To compete, Google’s cloud unit has increased capital spending, particularly in generative AI, similar to Amazon Web Services and Microsoft’ Azure.
Google’s 2022 acquisition of cybersecurity firm Mandiant for $5.4 billion is paying off, with Mandiant now a key part of Google’s cloud-based cybersecurity services.
According to an IBD report, Alphabet’s “Other Bets”and Moonshots, which currently operate at a loss, remain important for investors to watch for potential developments.
Is Google stock a buy or sell now?
As Google stock has gained in 2024, whether the internet giant is a buy depends on several factors, including fundamentals, technicals, and each investor’s goals, strategy and risk tolerance.
Alphabet stock has seen both strong and weak years recently. Shares jumped 65% in 2021, then dropped 39% in 2022. Despite increasing competition in AI and internet search, Alphabet stock surged 58% in 2023.
Google’s Relative Strength Rating currently stands at 67 out of a possible 99, according to IBD Stock Checkup. The best stocks typically have an RS rating of 80 or higher. Its relative strength line has been declining.
Google stock holds a B-minus Accumulation/Distribution Rating, which reflects price and volume changes over the past 13 weeks of trading. A rating of A+ indicates strong buying, while E signals heavy selling. A C grade is considered neutral.
Additionally, Google’s IBD Composite Rating is 92 out of a best possible 99, signalling strong growth potential.
On MarketSurge, Google stock has a buy point of 182.02 based on a cup-with-handle base, and is approaching the buy zone as of November 7.
Long-term investors may want to consider taking profits due to ongoing legal challenges and AI competition. Ultimately, the decision to buy or sell depends on individual investment goals, strategies, and risk tolerance.
Prediction for Google Stock in 2025
Given Alphabet’s focus on advancing generative AI technologies, expanding cloud computing capabilities, and strengthening its core advertising business, Google stock has the potential for growth in 2025.
If the company successfully navigates antitrust challenges and secures its market share in key areas like AI-driven search and cloud services, the stock could outperform expectations.
However, risks from legal disputes, increasing competition from AI startups like OpenAI, and potential regulatory restrictions on its business practices could limit gains.
Analysts project that Alphabet’s ability to innovate and diversify its revenue streams, including ventures like Waymo and AI tools, will play a decisive role in its stock performance.
A moderate estimate suggests a growth range of 10-20%, contingent upon favorable resolutions to ongoing challenges and continued investment in AI and cloud markets.
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