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Alphabet, Inc. (GOOGL) continues to ride the wave of market volatility, and the company narrowly outperformed the S&P 500 with a loss of almost 1.0% compared to the S&P’s loss of about 1.9% over the past year. Hedge funds sold as Alphabet continued to lose momentum, though the stock rose on the WhaleWisdom HeatMap to a rank of ten from twenty-four.

Alphabet is a technology conglomerate holding company that operates through Google and Other Bets segments. The company was created through a restructuring of Google in 2015, becoming the parent company of Google and its subsidiaries. The restructuring allowed Alphabet to expand into other business areas beyond Google’s internet search and advertising, helping to grow income and make its business more diversified and resilient to market volatility. Since the restructuring into Alphabet, the company has acquired and operated various subsidiaries, broadening its revenue stream across different industries such as healthcare, life sciences, and robotics.

The technology giant’s Google segment includes internet products such as Google Search, Applications (Apps), DeepMind artificial intelligence, Google Ads, Google Maps, YouTube, Gmail, Android, and Chrome. The Google segment generates Alphabet’s revenue through its inter-connected applications, services, and hardware products. The Other Bets segment includes businesses such as Access, Nest, Verily, Google Fiber, Calico, and other initiatives.

Hedge Funds Sell

Hedge Funds adjusted their portfolios in the fourth quarter, and the aggregate 13F shares held decreased to approximately $49.9 million from $50.3 million, a slide of about 0.8%. Overall, 68 hedge funds created new positions, 252 added to an existing holding, 32 exited, and 260 reduced their stakes. In contrast, institutions increased their holdings by about 3.0% to $234.2 million from $227.3 million.


Encouraging Earnings Projection

Analysts expect to see earnings rise through 2023, with earnings per share predicted at $112.94 by December 2022 and $134.15 by December 2023. Year-over-year estimated increases could bring revenue growth to approximately $345.1 billion by 2023, up from the anticipated revenue of $299.3 billion for 2022.


Analysts Cut Price Targets

After Alphabet posted first-quarter results, many analysts reacted to missed earnings estimates by lowering price targets. When reporting first-quarter results, Alphabet also shared that it would increase its buyback program to $70 billion with continued investment in YouTube. The advertising market has been weaker, negatively impacting Alphabet’s Google segment, specifically YouTube.

Analyst Benjamin Black from Deutsche Bank lowered the firm’s price target to $2,900 from $3,150, rating shares as a Buy. Youssef Squali of Truist Securities fell the price target on Alphabet to $3,500 from $3,600. Raymond James analyst Aaron Kessler lowered the price target on Alphabet’s shares to $3,180 from $3,630 and shared optimism for long-term advertising revenue growth. Oppenheimer analyst Jason Helfstein maintained a price target of $3,290 and an Outperform rating on Alphabet’s shares. Analyst Scott Devitt of Stifel Institutional lowered the firm’s price target on Alphabet to $3,100 from $3,500 in response to first-quarter results and Alphabet management’s commentary about YouTube revenue being negatively impacted by external factors such as the Russia-Ukraine war. Stifel maintained a Buy rating on shares. Andy Hargreaves of KeyBanc held his firm’s price target on the stock and the Overweight rating. Hargreaves noted the resiliency of Alphabet’s stock as he left a price target of $3.08.

Cause for Optimism

Alphabet has a good history of growth and a strong presence in the tech sector. Though hedge funds were selling shares amidst market pullback, Alphabet outperformed the S&P 500. New investors may see lost momentum and be hesitant to acquire shares. However, lowered stock prices may also motivate acquiring shares, given optimistic future earnings estimates and Alphabet’s potential for long-term growth.


This entry was posted on Monday, May 9th, 2022 at 7:58 am and is filed under Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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