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The Zacks Analyst Blog Highlights Alphabet, Amazon, Microsoft and Apple
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For Immediate Release
Chicago, IL – October 25, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Apple (AAPL - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Is GOOGL Stock a Smart Buy Ahead of Q3 Earnings Next Week?
For third-quarter 2024, the Zacks Consensus Estimate for earnings is pegged at $1.83 per share, unchanged over the past 30 days and indicates 18.06% year-over-year growth.
The consensus mark for third-quarter revenues is pegged at $72.83 billion, indicating growth of 13.71% from the year-ago quarter’s reported figure.
Alphabet has an impressive earnings surprise history. GOOGL’s earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 9.6%.
Let’s see how things have shaped up for the upcoming announcement:
Proliferation of Gen AI to Boost Alphabet’s Q3 Results
The search giant’s to-be-reported quarterly results are expected to benefit from Android’s strength and solid momentum in search and cloud businesses. Expanding generative AI (Gen AI) capabilities are likely to have been a key catalyst. These factors are expected to have more than offset concerns related to increasing regulatory headwinds.
Alphabet has been cashing in on the increasing demand for Large Language Models (LLMs) with its most powerful AI model called Gemini.
Google’s Vertex AI, which enables developers to train, tune, augment and deploy applications using Gen AI models, is expected to have helped expand its clientele. Google’s launch of an enterprise-focused AI code completion and assistance tool called Gemini Code Assist is noteworthy.
These tools are likely to have contributed well to top-line growth in the to-be-reported quarter.
AI Integration Aids GOOGL’s Search Traffic Growth
Google’s continued efforts toward innovation in AI techniques to advance its search segment, which accounts for a major portion of its total revenues, are expected to have driven traffic on its platform in the to-be-reported quarter.
The integration of Gen AI technology into the search engine is expected to have continued to benefit Google Search. The Search Generative Experience (“SGE”), which leverages Gen AI technology to make search results more natural and intuitive, is likely to have contributed well.
Alphabet’s strength in the mobile search category on the back of mobile-friendly algorithms, robust product listings and flight search capabilities is a plus.
Alphabet’s growing efforts to deliver better performance and profitability to advertisers on the back of foundational research models and LLMs are expected to have contributed well. SGE is expected to have aided the advertisement business as it can create relevant, customized and high-quality ads.
YouTube Shorts is likely to have continued its momentum in the to-be-reported quarter. Google’s growing efforts to bolster relationships with content creators are likely to have a positive impact.
Growing Cloud Business: A Key Catalyst for GOOGL
Alphabet has been rapidly growing in the booming cloud-computing market. Google Cloud has solidified its position as the third-largest provider in the highly competitive cloud infrastructure market against Amazon’s cloud arm Amazon Web Services and Microsoft’s Azure.
The solid adoption of the Google Cloud Platform and Google Workspace is expected to have driven growth in the Google Cloud segment. Alphabet’s growing investments in infrastructure, security, data management, analytics and AI are expected to have been major positives.
Its strengthening Gen AI-backed cloud offerings are expected to have driven Google Cloud’s momentum among cloud customers in the to-be-reported-quarter.
GOOGL Shares Lag Sector, Industry
Alphabet’s shares have appreciated 16.5% on a year-to-date (YTD) basis, underperforming the Zacks Internet Services industry and the Zacks Computer & Technology sector. Over the same timeframe, the sector and industry have returned 17.2% and 27.1%, respectively.
Alphabet shares have also underperformed its “Magnificent 7” peers Apple, Amazon, NVIDIA and Meta Platforms YTD. Microsoft and Tesla are the only two Magnificent 7 peers that have lagged the GOOGL shares over the same timeframe.
Apple, AMZN, NVIDIA, Meta Platforms and Microsoft shares have returned 19.9%, 21.6%, 181.8%, 59.3% and 12.9%, respectively. Tesla shares have declined 14% YTD.
Alphabet’s underperformance can be attributed to growing regulatory concerns. It is facing increasing regulatory headwinds and global scrutiny over its search dominance.
Google’s alleged wrong practices constitute the utilization of Android to promote its own search engine unfairly. It is facing several lawsuits regarding data privacy, competition practices, AI usage, and copyright issues in several countries across the globe.
GOOGL Shares Are Overvalued
GOOGL shares are overvalued, as suggested by Value Score C.
Currently, GOOGL is trading at a premium, with a forward 12-month Price/Sales of 6.27X compared with the industry’s 5.88X.
Here’s Why GOOGL Shares Are a Buy Ahead of Q3
Alphabet’s growing GenAI capabilities present a potential catalyst for future growth. Its dominant position in the search engine market is a strong growth driver.
Despite a stretched valuation, increasing regulatory concerns and stiff competition in the cloud space, these factors make GOOGL shares attractive for investors.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Alphabet, Amazon, Microsoft and Apple
For Immediate Release
Chicago, IL – October 25, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and Apple (AAPL - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Is GOOGL Stock a Smart Buy Ahead of Q3 Earnings Next Week?
Alphabet is set to report third-quarter 2024 results on Oct. 29.
For third-quarter 2024, the Zacks Consensus Estimate for earnings is pegged at $1.83 per share, unchanged over the past 30 days and indicates 18.06% year-over-year growth.
The consensus mark for third-quarter revenues is pegged at $72.83 billion, indicating growth of 13.71% from the year-ago quarter’s reported figure.
Alphabet has an impressive earnings surprise history. GOOGL’s earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 9.6%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote
Let’s see how things have shaped up for the upcoming announcement:
Proliferation of Gen AI to Boost Alphabet’s Q3 Results
The search giant’s to-be-reported quarterly results are expected to benefit from Android’s strength and solid momentum in search and cloud businesses. Expanding generative AI (Gen AI) capabilities are likely to have been a key catalyst. These factors are expected to have more than offset concerns related to increasing regulatory headwinds.
Alphabet has been cashing in on the increasing demand for Large Language Models (LLMs) with its most powerful AI model called Gemini.
Google’s Vertex AI, which enables developers to train, tune, augment and deploy applications using Gen AI models, is expected to have helped expand its clientele. Google’s launch of an enterprise-focused AI code completion and assistance tool called Gemini Code Assist is noteworthy.
These tools are likely to have contributed well to top-line growth in the to-be-reported quarter.
AI Integration Aids GOOGL’s Search Traffic Growth
Google’s continued efforts toward innovation in AI techniques to advance its search segment, which accounts for a major portion of its total revenues, are expected to have driven traffic on its platform in the to-be-reported quarter.
The integration of Gen AI technology into the search engine is expected to have continued to benefit Google Search. The Search Generative Experience (“SGE”), which leverages Gen AI technology to make search results more natural and intuitive, is likely to have contributed well.
Alphabet’s strength in the mobile search category on the back of mobile-friendly algorithms, robust product listings and flight search capabilities is a plus.
Alphabet’s growing efforts to deliver better performance and profitability to advertisers on the back of foundational research models and LLMs are expected to have contributed well. SGE is expected to have aided the advertisement business as it can create relevant, customized and high-quality ads.
YouTube Shorts is likely to have continued its momentum in the to-be-reported quarter. Google’s growing efforts to bolster relationships with content creators are likely to have a positive impact.
Growing Cloud Business: A Key Catalyst for GOOGL
Alphabet has been rapidly growing in the booming cloud-computing market. Google Cloud has solidified its position as the third-largest provider in the highly competitive cloud infrastructure market against Amazon’s cloud arm Amazon Web Services and Microsoft’s Azure.
The solid adoption of the Google Cloud Platform and Google Workspace is expected to have driven growth in the Google Cloud segment. Alphabet’s growing investments in infrastructure, security, data management, analytics and AI are expected to have been major positives.
Its strengthening Gen AI-backed cloud offerings are expected to have driven Google Cloud’s momentum among cloud customers in the to-be-reported-quarter.
GOOGL Shares Lag Sector, Industry
Alphabet’s shares have appreciated 16.5% on a year-to-date (YTD) basis, underperforming the Zacks Internet Services industry and the Zacks Computer & Technology sector. Over the same timeframe, the sector and industry have returned 17.2% and 27.1%, respectively.
Alphabet shares have also underperformed its “Magnificent 7” peers Apple, Amazon, NVIDIA and Meta Platforms YTD. Microsoft and Tesla are the only two Magnificent 7 peers that have lagged the GOOGL shares over the same timeframe.
Apple, AMZN, NVIDIA, Meta Platforms and Microsoft shares have returned 19.9%, 21.6%, 181.8%, 59.3% and 12.9%, respectively. Tesla shares have declined 14% YTD.
Alphabet’s underperformance can be attributed to growing regulatory concerns. It is facing increasing regulatory headwinds and global scrutiny over its search dominance.
Google’s alleged wrong practices constitute the utilization of Android to promote its own search engine unfairly. It is facing several lawsuits regarding data privacy, competition practices, AI usage, and copyright issues in several countries across the globe.
GOOGL Shares Are Overvalued
GOOGL shares are overvalued, as suggested by Value Score C.
Currently, GOOGL is trading at a premium, with a forward 12-month Price/Sales of 6.27X compared with the industry’s 5.88X.
Here’s Why GOOGL Shares Are a Buy Ahead of Q3
Alphabet’s growing GenAI capabilities present a potential catalyst for future growth. Its dominant position in the search engine market is a strong growth driver.
Despite a stretched valuation, increasing regulatory concerns and stiff competition in the cloud space, these factors make GOOGL shares attractive for investors.
Alphabet currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.