We rely on Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) services heavily every day and in more than one way. But, when it comes to investing, the answer to whether GOOG stock is worth a buy is a bit more nuanced than you might expect.
With that in mind, let’s take a closer look at what has been happening with GOOG recently, both off and on the stock chart. From there, we’ll determine the best course of action for investors today.
Google. YouTube. Each of these are inexorably tethered to tech giant Alphabet. And if you’re at all like most global consumers, you can’t do without either service in today’s digital, information-driven world.
A Quick Look At GOOG Stock Today
Alphabet’s most recent earnings report at the start of February demonstrated that demand and so much more in spades. In summary, Google’s parent company delivered better-than-forecast year-over-year revenue growth of 32% for its fourth-quarter.
Those burly results were backed by strong ad revenues from Covid-resistant YouTube and Alphabet’s Google search business.
Furthermore, according to CEO Sundar Pichai, the company’s commitment to advancing artificial intelligence is supporting Alphabet’s ability to get the most out of all those eyeballs glued to their screens.
But GOOG’s success didn’t stop there.
Alphabet’s cloud business produced a $22 billion annual run rate as sales stormed higher by nearly 45%.
There’s no denying tech peers Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) are the cloud’s top dogs with AWS and Azure. However, the report all but confirmed Google’s growing presence in the growth market and a certain, future cash cow.
Today, the net sum of the diversified tech behemoth’s efforts translate into a very affordably priced GOOG stock. (Well, kinda sorta).
Google’s near-$2,700 per share price tag is enough to make many scoff. But that’s also not the right way to look at Alphabet or any stock for that matter.
Ultimately, despite GOOG’s near $2 trillion market cap, shares trade at less than 25 times trailing earnings adjusted for cash. Moreover, given the outfit’s massive core ad, subscription and hardware businesses, which are growing collectively at more than 30%, shares are also colliding with value right now.
And with future “next big thing” propositions from Alphabet’s “Other Bets” incubator that houses autonomous-driving start-up Waymo, its tech-based, “fountain of youth” Calico venture and other promising businesses, it’s all “GOOG,” right?
GOOG Stock Weekly Price Chart
Source: Charts by TradingView
If share price in dollar terms is holding investors back, Alphabet’s pending 20-to-1 stock split will invariably help with that.
But I’d caution that notwithstanding seemingly favorably share pricing, fundamentals and business prospects, GOOG stock is at risk.
And if the observation is right, buying shares today could quickly turn into a disadvantaged purchase.
Technically and as of Friday’s close, Google is trying to establish a smaller weekly chart double-bottom pattern off its two-year uptrend formed since March 2020’s ubiquitous Covid-driven bear market low.
That’s the good news.
But there are indications the pattern’s risk of failure and downside far outweigh the bullish expectations.
After a handful to maybe several bullish weekly basing patterns formed over GOOG stock’s rally out of its Covid bottom, this past fourth quarter’s failed cup breakout and this year’s “V-shaped” base failure warning that Alphabet’s corrective action isn’t finished.
If GOOG goes on to take out last week’s hammer candlestick, a larger bear market would officially signal just slightly beneath the pattern.
I’m not typically a fan of blanket warnings, such as the decline of 20% associated with a bear cycle. And more often than not, I’d be looking at the price action for the bullish opportunity.
But today, that’s not the situation facing GOOG stock investors. The simple fact is that just like bull markets, all bear markets have to start somewhere.
And in lieu of the past two year’s price action, as well as a fresh and uninviting bearish stochastics crossover, GOOG’s bears are aligning themselves nicely with a classic pattern and percentage takedown that would be foolish to turn a blind eye to.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.