Google parent company Alphabet (NASDAQ:GOOG;NASDAQ:GOOGL) is firing on all cylinders and one of the best technology stocks that investors can own. GOOG stock is currently trading just below its all-time high of $186 per share on a split adjusted basis.
The company achieved a $2 trillion market capitalization for the very first time on April 26 and continues to grow. Analysts predict further gains. 38 analysts agree that Alphabet stock is a “strong buy” with a nearly 10% higher median price target. There isn’t a single “sell” rating on the stock.
Dividends and Buybacks
The $2 trillion market cap was achieved when Alphabet’s stock jumped 10% higher after the company reported blowout Q1 results and announced its first ever dividend payment and a $70 billion stock buyback program.
On June 17, Alphabet paid its stockholders a cash dividend of 20 cents per share. The company said that it “intends to pay quarterly cash dividends in the future,” with plans to steadily increase the amount.
In addition to the dividend, Alphabet announced a $70 billion stock buyback program. The company had $108 billion of cash on hand at the end of March.
Alphabet announced the dividend and share repurchases along with Q1 financial results that crushed Wall Street forecasts. Key to the successful quarter was a rebound in online advertising, which pushed Alphabet’s revenue up 15% from a year ago, the fastest rate of growth in two years.
Total advertising sales at search engine Google came in at $61.66 billion, up 13% from $54.55 billion a year ago. YouTube advertising revenue came in at $8.09 billion, topping forecasts of $7.72 billion.
Additionally, revenue at Google Cloud totaled $9.57 billion, beating estimates of $9.35 billion. Alphabet said that its online advertising business is accelerating after a difficult 2022 and 2023 when companies cutback their ad spending.
AI Products and GOOG Stock
The biggest catalyst driving Alphabet stock higher is the company’s leading role in artificial intelligence.
Not only is Alphabet a leader in the research and science behind AI with its DeepMind laboratory, but the company is also starting to monetize its AI offerings, which should boost future revenue and profits.
Alphabet’s newest AI offerings were on full display recently at the company’s annual developer conference.
A this year’s I/O developer event, Alphabet showcased how it is integrating AI into online search through Google, which is used by billions of people around the world each day.
The company also unveiled a new version of the Android operating system and update for its most advanced AI technology known as “Gemini.” Alphabet also released a video that went viral online showing a new AI model that can draw conclusions from a camera’s live feed.
Analyst have been impressed with Alphabet’s latest AI products, claiming that the company is “repositioning itself as the world’s AI software leader.”
Buy Alphabet Stock
There are numerous catalysts pushing GOOG stock to record highs. The company’s core business of online search is thriving again now that online advertising has rebounded.
At the same time, Alphabet has emerged as a global leader in all areas of AI and one of the best ways for investors to play the boom in artificial intelligence.
Throw in gathering strength in cloud computing, stock buybacks, and a first ever dividend payment and the decision is a no-brainer. Alphabet stock is a buy.
On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
