Motley Fool - Tue Apr 30, 5:57AM CDT
Shares of Google's parent company, Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG), have risen about 60% over the past year, but there could be more fuel in the tank. Susquehanna analyst Shyam Patil recently raised Google's price target on Alphabet to $225 from $170 and maintained the firm's positive rating.
Why Wall Street's bullish for Alphabet
Patil and his investment bank colleagues are encouraged by Alphabet's recent performance. Both its advertising and cloud computing segments outperformed expectations. Total first-quarter revenue climbed 15% year over year to a record-breaking $80.5 billion.
First-quarter Google advertising sales climbed 13% year over year, and this isn't the only sign that the cyclical ad industry is in an upswing. Total acquisition costs crept forward more slowly than sales, which allowed operating profit to soar 46% year over year to $25.5 billion.
Alphabet employs about 10,000 fewer people than it did a year ago, but that didn't slow down its cloud computing business. Cloud sales rose 28% year over year to $9.6 billion. The cloud segment also reported a $900 million operating profit, which was a new record for the company.
Is Google's parent company a good stock to buy now?
Patil's $225 price target for Alphabet seems reasonable. The stock is up sharply this year, but it's still trading for a sensible valuation of around 23 times forward-looking earnings expectations. Even if the stock doesn't reach its target in the next 12 months, long-term shareholders have an excellent chance to come out ahead over the long run.
Alphabet recently declared a dividend and another $70 billion in stock buybacks. The quarterly payout of $0.20 per share translates to a minuscule yield of about 0.5%, but it's still a great sign of confidence from the company.
Should you invest $1,000 in Alphabet right now?
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FAQs
The Bottom Line. There's definitely a difference between the price of the two types of Google shares that you can buy, though it is relatively small. If you feel that voting at the stockholders' meeting is important to you, then aim for the A shares.
Is Alphabet a buy or sell? ›
Alphabet Class A has a consensus rating of Strong Buy which is based on 28 buy ratings, 9 hold ratings and 0 sell ratings. The average price target for Alphabet Class A is $204.21. This is based on 37 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
Why is GOOG always higher than GOOGL? ›
Price and voting rights are the only differences between GOOG and GOOGL shares of Google. Normally shares that have voting rights are more valuable than shares without voting rights. However in the case of Google stock the non-voting shares currently cost more per share.
What is the prediction for Alphabet class A stock? ›
Based on analysts offering 12 month price targets for GOOGL in the last 3 months. The average price target is $204.15 with a high estimate of $240 and a low estimate of $170.
Which stock is better Microsoft or Alphabet? ›
This chart shows Alphabet's shares are trading at a significantly better value than Microsoft's, with a far lower price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio. Additionally, Alphabet's P/E and P/S are below their 10-year averages, while Microsoft's are higher for both metrics.
Is Alphabet a buy Motley? ›
Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn't one of them.
How much will Alphabet stock be worth in 5 years? ›
Even if Alphabet is trading at 24 times forward earnings after five years, which is equivalent to its five-year average forward price-to-earnings ratio, its stock price could jump to $332 in five years.
What is the future of Alphabet shares? ›
Google stock forecast 2024
Analysts expect modest growth in Alphabet's share price for 2024, projecting full-year earnings per share of $7.66. That's up slightly from last year's EPS of $5.80. Analysts forecast full-year revenue of $347.36 billion, compared to $307.39 billion for 2023.
Is Alphabet a buy zacks? ›
Valuation metrics show that Alphabet Inc. may be fairly valued. Its Value Score of C indicates it would be a neutral pick for value investors.
Should I invest in GOOGL or GOOG? ›
So what exactly is the difference between the two and which one should you buy? There is only one difference: GOOGL stocks grant voting rights to shareholders, offering a voice in company decisions, while GOOG stocks don't. So you should make your choice accordingly.
Investors generally should consider Class A shares (the initial sales charge alternative) if they expect to hold the investment over the long term. Class C shares (the level sales charge alternative) should generally be considered for shorter-term holding periods.
Why does Alphabet have two stocks? ›
As mentioned above, Alphabet has two types of stocks: Class A (GOOGL) and Class C (GOOG). Holders of Class A stocks have voting rights, while Class C stocks do not. This design allows the company's founders and core team to raise funds without diluting control.
Which is the best Google stock to buy? ›
In terms of which share class is the better investment, there really is no meaningful difference from a performance standpoint. As of Aug. 20, GOOG shares were up 32.04% over the past year, while GOOGL shares were up 31.31% over the same period.
Can Google stock hit 5000? ›
The $5,000 per share thesis is somewhat dependent on there not being an economic slowdown anytime soon – although given that many observers predict an economic boost from the recovery of the coronavirus crisis, this possibility remains unlikely.
What will Amazon stock be worth in 5 years? ›
Of the 47 analysts who recommended Amazon in June, 44 rated it a buy or a strong buy. Forecasters predict that Amazon will reach $200 per share a year from now and will continue to rise to $250 per share at the end of 2026. In 2027, the prediction is for a price of $300, and $250 by the end of 2028.
Is it time to buy Alphabet? ›
Great news for investors – Alphabet is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $254.39, but it is currently trading at US$165 on the share market, meaning that there is still an opportunity to buy now.
Will Alphabet Class C stock split? ›
On July 15, 2022, the company executed a 20-for-one stock split with a record date of July 1, 2022, effected in the form of a one-time special stock dividend on each share of the company's Class A, Class B, and Class C stock.
Which Google stock pays dividends? ›
Alphabet Inc. ( GOOGL ) pays dividends to its shareholders. How much is Alphabet Inc.'s dividend? Alphabet Inc.'s ( GOOGL ) quarterly dividend per share was $0.20 as of September 16, 2024 .
