Post-earnings, investors bailed on Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL), but according to my Google stock analysis, there’s no need to head for the exits. Taking a closer look at the report itself, one thing’s clear. The results didn’t exactly warrant such a negative reaction.
In the following Google stock analysis, we’ll dig deeper into the numbers and show why there’s really no need to panic on Alphabet stock right now.
GOOG Stock and the Market’s Reaction
On Jan. 30, Alphabet released its results for the quarter ending Dec. 31, 2023. Revenue came in at $86.3 billion, representing a 13% increase compared to the prior year’s quarter. Earnings per share came in at $1.64, an over 56% increase compared to Q4 2022. Revenue and earnings also came in ahead of sell-side forecasts.
Although overall results beat forecasts, Alphabet’s advertising revenue during the quarter did not. Advertising revenue came in at $65.5 billion for the quarter. While representing a nearly 11% year-over-year increase, analysts were expecting ad revenue of $65.8 billion.
This is arguably an arbitrary reason for investors to jump ship after earnings, though investors may have wanted to sell and take profit after GOOG’s 40.7% increase in the past year. The lack of impact from Alphabet’s AI endeavors also may explain the negative earnings response.
Still, whatever the root cause, this pullback may prove temporary. There’s plenty on tap that could drive a resurgence in bullishness pretty soon.
Google Stock Analysis: Time to Buy?
As the market clearly overreacted in its response to earnings, I see little reason to sell, if you already own GOOG stock. However, does that mean, if you’ve yet to buy it, or are interested in increasing your exposure, that now is an opportune time to buy?
According to the sell-side community, yes, it is. Per a recent article in Barron’s, several analysts have reiterated their bullishness for Alphabet shares, and have raised their respective price targets.
A big reason for this is the perceived potential growth upside from the company integrating generative AI features into its Search platform, but that’s not the only reason.
Citi’s Ronald Josey, who increased his price target for GOOG from $153 to $168 per share, also cited “improving trends” for Alphabet’s non-search businesses, such as Google Cloud and YouTube. Given earnings forecasts, it’s easy to see this stock not only hit this analyst’s price target, but rise to levels well above it.
If the company delivers earnings in 2024 ahead of current consensus forecasts ($6.74 per share), and makes major progress integrating/monetizing its AI technology (such as its Gemini AI model), shares could really make a big move higher.
Good Reason to be Bullish
The market unfairly punished Alphabet shares after earnings, because of its perception that future growth prospects are uncertain. However, with multiple catalysts (AI and non-AI) at play that could help the company continue to increase earnings at a double-digit clip, in hindsight recent price action will likely be seen as an overreaction.
With higher earnings and re-rating potential comes big upside. Merely hitting earnings forecasts, and re-rating to 25 times forward earnings, could send GOOG up to the above-mentioned analyst’s price target. Beating these forecasts, and re-rating to a forward multiple in the high-20s, could get this stock up to over $200 per share in a relatively short span of time.
If you’ve been looking to enter or add to a GOOG stock position, now may be the time to do so.
GOOG stock earns a B rating in Portfolio Grader.
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.
