Alphabet, Inc. (GOOG) experienced soaring growth over the past year, dramatically outperforming the S&P 500. Alphabet’s stock rose by approximately 97.7% over the past 2-years compared to the S&P’s gain of about 36.5%. The holding company moved up on the WhaleWisdom Heatmap to a ranking of fifteen from thirty-five. However, hedge funds and institutions were actively selling despite exceeding Wall Street’s estimates.

Alphabet is a technology conglomerate holding company that is the parent company of numerous subsidiary companies organized through segments. Alphabet’s Google segment includes their primary Internet products: Search, Ads, Maps, Apps, Cloud, Android, Chrome, and Google Play. This segment also sells hardware products such as Chromebooks and Nexus. Their Other Bets segment includes businesses such as Google Fiber, Nest, Verily, X, and Google Capital. Alphabet leverages its search, web browsing, cloud computing, and mobile operating systems to generate revenue through the sale of advertising.

Hedge Funds and Institutions Trim Portfolios

Hedge Funds adjusted their portfolios in the third quarter, and the aggregate 13F shares held decreased to approximately 45.1 million from 46.2 million, a slide of about 2.3%. Overall, 34 hedge funds created new positions, 160 added to an existing one, 20 exited, and 253 reduced their holdings. Institutions also sold and lowered their holdings by about 2.1% to $203.4 million. The 13F metrics between 2017 and 2022 demonstrate Alphabet’s gradual upward trend.

(WhaleWisdom)

Encouraging Multi-year Figures

Analysts expect to see earnings rise over the next two years, with increases in growth estimated to bring earnings per share to $115.78 by December 2022 and $136.26 by December 2023. Year-over-year estimated increases may also bring revenue to close to $349.5 billion by 2023, up from a predicted $301.3 billion in 2022.

(WhaleWisdom)

Positive Feedback from Analysts

Analysts appear to recognize Alphabet’s strength in the market and raised price targets. In addition to exceeding Wall Street’s expectations, Alphabet also announced a 20-for-1 stock split. UBS Equities analyst Lloyd Walmsley was also optimistic following the announcement and boosted his price target to $3,900 per share, citing that the stock split is likely to bring more retail investors. It should be noted that the news isn’t all rosy. Alphabet’s Google business continues to face antitrust lawsuits and pressure from governments and states such as Texas, claiming that the search engine is abusing its dominance in online advertising. Google is currently seeking to get the Texas antitrust case dismissed.

Analyst Daniel Salmon of BMO Capital Markets noted the powerful cash-generating business model of Google Search and raised the firm’s price target on Alphabet Class A to $3,300 from $3,200, maintaining an Outperform rating on shares. MKM Partners analyst Rohit Kulkarni raised the firm’s price target to $3,375 from $3,150 and kept a Buy rating on shares. Analyst Scott Devitt raised Stifel’s price target on Alphabet to $3,500 from $3,200 with a Buy rating on shares, reporting another strong quarter of revenue and operating income. Monness, Crespi, Hardt & Co. analyst Brian White also raised the price target on Alphabet and kept a Buy rating. White raised his firm’s price target to $3,850 from $3,660 after the company reported strong fourth-quarter results, noting that while antitrust investigations may carry on, the company should benefit from current ad trends, gain strength in the cloud, and introduce metaverse innovations.

Favorable Outlook

Alphabet’s impressive market growth and future earnings estimates are encouraging. Analysts raised price targets and appeared optimistic about Alphabet’s ability to generate revenue moving forward. The opportunity to buy before the announced stock split may appeal to investors.