Treasury bond yields could stay higher for longer and there may be a slowdown in the U.S. economy. However, Google and YouTube parent company Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) can continue to thrive despite these challenging conditions. GOOGL stock earns a “B” grade as it might dip or go sideways for a while if there are economic problems, but it should still recover.
Alphabet is a gigantic and well-capitalized technology company. However, some folks might lose sleep at night because they’re worried about high bond yields negatively pressuring tech stocks. A prominent analyst has a counterargument, though, so let’s dive headfirst into the debate now.
A ‘Very Optimistic’ Outlook for GOOGL Stock
Wedbush Managing Director Scott Devitt fully understands that high bond yields might cause problems for mega-cap technology stocks. Nevertheless, it maintains a bullish outlook for certain tech companies that successfully deploy generative artificial intelligence, including Alphabet.
Despite recession worries, “these companies have proven themselves in terms of continuing to be secular growth stories,” Devitt assures. “We have another cycle that we’re in the first inning of in AI, and so we’re very optimistic on the group overall,” he added.
Devitt highlighted Alphabet as a company that’s poised to benefit from generative AI. Several product/service developments support Devitt’s argument. For example, YouTube recently added AI-powered features for the platform’s video creators.
Furthermore, Google has made its conversational/generative AI feature, known as Search Generative Experience, available to teenagers. In addition, Alphabet loaded its Pixel 8 and Pixel 8 Pro smartphones with a host of AI-augmented features.
Alphabet Bets on Driverless Car Technology
Along with generative AI, Alphabet is also betting on the future growth of driverless vehicle technology. Specifically, Alphabet has reportedly taken a 3.5% stake in Oxa, a British company developing an “operating system” for driverless car fleets.
Alphabet already has a business called Waymo, which provides autonomous rides to people in selected U.S. cities. However, it looks like Alphabet is taking its driverless-vehicle ambitious to a new, international level with its stake in Oxa.
Hence, prospective GOOGL stock investors should decide whether they’re on board with Alphabet’s ambitions in the driverless-car industry. As with any new technology, there are risks and potential rewards to consider. The adoption of driverless-vehicle technology might not be a smooth ride, and Alphabet is putting a lot of capital on the line.
GOOGL Stock: Still a Solid Big-Tech Bet
Alphabet, with its generative AI embedded products and services, should continue to grow as a business throughout various economic cycles. Regardless of bond-yield fluctuations, there’s no need to stay up at night worrying about Alphabet.
Granted, not everyone will necessarily be enthused about Alphabet’s foray into driverless-vehicle technology. So, all in all, GOOGL stock gets a “B” grade and may be appropriate for a moderately sized portfolio allocation.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
