Google Is Still One Of The Best Mega-Cap Stocks To Buy

Summary:

• Alphabet Inc. remains a “Buy” due to strong financial performance, growth in advertising and cloud units, and exaggerated legal risks.
• Q3 FY2024 results show 37% YoY EPS growth, driven by robust advertising, Google Cloud, and subscription services, despite rising CAPEX for AI infrastructure.
• Google’s legal risks from the DOJ antitrust case are likely overstated, with potential counterproposals mitigating negative impacts on revenue and operating income.
• Valuation suggests a fair value of $234 per share by FY2025, assuming 25x earnings multiple and exceeding EPS forecasts by 5%.

Intro & Thesis

I first wrote about Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) (NEOE:GOOG:CA) stock here on Seeking Alpha in mid-November 2022 with a “Hold” rating, which I upgraded to “Buy” in January 2024 when the firm announced a massive layoff plan

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in GOOG over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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