Alphabet Inc Cl A
Alphabet Inc Cl A
IBD Stock Analysis
- Shares near buy point of 1,415.63 out of cup-with-handle base
- Relative Strength Rating hitting new highs; now at 85 out of 99
- Company faces challenges on antitrust, digital ads, competition
Industry Group Ranking
Cup with Handle
* Not real-time data. All data shown was captured at 12:26PM EDT on 05/22/2020.
Google parent Alphabet (GOOGL) is the IBD Stock of the Day as the internet giant hovers just below a newly forged entry point. Google stock needs a breakout in strong volume to sway investors mulling the possibility the company will soon face antitrust litigation.
After plunging 34% from its all-time high as fears rose over the Covid-19 outbreak, Google stock has clawed back. Shares ended Friday’s regular session up fractionally to 1,413.24, just under a cup-with-handle buy point of 1,415.63. Shares ventured into the buy zone intraday and touched a high of 1,417, but ultimately ended the session under that entry point for the third straight time.
Google stock has a Relative Strength Rating of 85 out of a best-possible 99. The relative strength line, which compares a stock’s price performance with that of the S&P 500, has been hitting new highs.
Even so, Google stock faces headwinds. According to reports, the Department of Justice is readying an antitrust lawsuit most likely focused on Google’s digital advertising business. Also, some states could file antitrust lawsuits.
Digital advertising growth has slowed in 2020 amid the coronavirus pandemic. In the first quarter, overall advertising rose 10% to $33.76 billion.
Google Stock: FANG Battle Lines Drawn In E-Commerce?
In the June quarter, analysts project that Google’s net revenue will fall 4.2% to $30.38 billion, despite growth in cloud computing and at YouTube.
Amazon has been gaining share in digital advertising. Now a battle is brewing in e-commerce, analysts say.
Google recently made a big change in how it handles e-commerce listings. Its “Shopping tab” will largely consist of free listings. The listings are displayed when consumers do internet searches.
Meanwhile, Facebook this week unveiled a service that allows sellers to create digital storefronts on its social media platforms. The company calls it “Facebook Shops.”
“The Facebook vs. Alphabet vs. Amazon e-commerce battle lines continue to be drawn,” Morgan Stanley analyst Brian Nowak said in a report to clients.
Google To Pare Investments Amid Covid-19
Google stock has an Accumulation/Distribution Rating of C+, improving from E about six weeks ago. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
The rating, on an A+ to E scale, also measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Some analysts are bullish on other parts of Google’s business as competition heats up in digital advertising. In the March quarter, YouTube revenue rose 33% to $4.038 billion. Cloud-computing revenue rose 52% to $2.78 billion.
Google’s profit margins remain an issue amid high investments in data centers for cloud computing, artificial intelligence, YouTube and consumer products. Google also has been on a hiring spree.
Amid the coronavirus emergency, Google stock analysts have been told by the company it plans to cut back on investments.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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