This Popular Stock Is on the Rise But Still Affordable: Why You Should Buy It Now
Alphabet, Google’s parent company, released strong first-quarter earnings on April 25 — beating analysts’ expectations and buoyed by the artificial intelligence (AI) wave. The company also announced its first-ever dividend program of 20 cents per share that will be paid on June 17, 2024, to stockholders, according to the earnings release.
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In turn, Alphabet’s shares skyrocketed and were up 10% in pre-market trading on April 29. The company — with a $2.15 trillion market cap as of April 29 — saw its stock shot up 25% year-to-date and 61% in the past year.
“Our results in the first quarter reflect strong performance from Search, YouTube and Cloud,” Google CEO Sundar Pichai said in the release. “We are well under way with our Gemini era and there’s great momentum across the company. Our leadership in AI research and infrastructure and our global product footprint, position us well for the next wave of AI innovation.”
Also see how much $1,000 invested in Alphabet 10 years ago would earn you today.
Why Should You Buy It?
Several analysts believe the stock still has room to grow. For instance, CFRA Research said it maintained its Buy opinion on the stock and lifted its 12-month target to $190 from $175, according to an April 25 research note.
“We are impressed by execution on costs, with operating margin of 40% within services businesses, where nearly all its profits are derived, widening from 35% in Q4 and year ago,” Angelo Zino, chartered financial analyst (CFA) and CFRA analyst said.
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Meanwhile, analysts at Wedbush Securities also raised their target prices to $205 from $175 and have an Outperform rating on the stock.
“Alphabet remains on our ‘Best Ideas List’ and we reiterate our Outperform rating,” Dan Ives, Wedbush analyst, wrote in the April 25 note. “We think 1Q results further validate Google’s position as a leading AI beneficiary as management commentary directly addressed the structural risks of generative AI on the Search business.”
More broadly, Ives also said in an earlier April note that Wedbush believes “1Q earnings will be a major positive catalyst for the tech sector and expect tech stocks to be up another 15% for the year adding to the strong start to 2024 as now the broader tech growth story takes center stage led by software, cyber security, digital advertising and semis.”
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