Alphabet Inc. Stock They do not register movements for months and lag behind their peers in the Magnificent Sevenas investors struggle to assess the risks facing the company. This Tuesday, after the market closed in Wall Streetthe company will present its results.
It’s hard to believe that this afternoon’s results will dispel those concerns. Earnings from Google’s parent company are expected to reveal that long-term growth trends remain intact. They could also offer new insights into any boosts you’re experiencing thanks to artificial intelligence.
However, even positive report could be overshadowed by concerns about unquantified cost of antitrust actiona headache that drags down the stock and makes it look cheap among the technological megacaps. In addition, there will be scrutiny on whether Alphabet’s dominant share of the internet search market is at risk from other players in the artificial intelligence space.
Alphabet stock
It happens that Alphabet shares are practically stagnant in the last six months, weakest performance among megacaps. The Bloomberg Magnificent Seven Total Return Index rose nearly 26% in that period.
Alphabet’s results are expected to show revenue growth of close to 14% and net profit expansion of more than 18%. Both indicators are projected to remain above double-digit rates in the coming years.
Those healthy trends, along with Alphabet’s more modest valuation, could mean a lower bar to clear this quarter. Jefferies wrote that Alphabet faces a “less demanding environment among megacaps” ahead of earnings, and that the stock should “raise gradually over time, driven by fundamentals, although battling regulatory/antitrust headwinds.”
Alphabet’s fundamentals and valuation discount stand out among Big Tech, where investors are increasingly cautious about long-term growth prospects and demanding higher share price multiples.
However, andThe discount also reflects the idiosyncratic risks facing Alphabet. Antitrust regulation has emerged as a central headwind since a federal judge ruled that Google illegally monopolized the search market. Earlier this month, the Justice Department told a federal judge that is considering recommending that Google be forced to sell parts of its operations. Although it is considered unlikely, and Alphabet is expected to appeal more extreme punishments, the uncertainty could remain a burden in the long term.
Alphabet is also among companies pouring billions of dollars into AI-related capital expenditures, something investors want to see paid off in terms of improved growth and efficiency. Higher-than-expected spending was one reason the stock sold off after the previous quarter’s results.
Source: Ambito
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