With 2024 winding down, the “Santa Rally” has hit turbulence for Google-parent Alphabet (GOOGL) and the technology sector. Google stock has gained nearly 37%, pulling back a bit from an all-time high set on Dec. 17.
In 2024, bullish views on artificial intelligence pushed shares of the Magnificent Seven higher. Amid the 2024 gain of Google stock so far, whether the internet giant is a buy depends on fundamental and technical factors as well as each investor’s own goals, strategy and risk tolerance.
Further, the impact of generative artificial intelligence on the internet search advertising business remains a key issue for investors. Also, antitrust lawsuits filed by the Department of Justice have pressured Google stock.
“The future of Alphabet is more nuanced than the market has suggested this year,” said Michael Nathanson, analyst at MoffetNathanson, in a recent report.
Google Stock: Search Business Threatened
He added: “Concerns about the outright decimation of Google Search by new entrants appear overblown. While fragmentation seems likely, the extent of market share erosion remains uncertain, especially if gen AI chatbots drive incremental growth in overall search activity. That said, the rise of LLM-driven technology undeniably represents the greatest challenge to Google’s dominance in search to date.”
Generative AI startup OpenAI’s ChatGPT continues to slowly gain market share. ChatGPT delivers answers to search queries while Google’s business model has been based on providing web links. Also, startup Perplexity is another new rival.
Google is competing with OpenAI, Facebook-parent Meta Platforms (META) and many others in building new foundation models. In December, Google unveiled its new artificial intelligence model, Gemini 2.0.
Google began deploying AI Overviews in the U.S. in mid May, with conversational summaries topping links for many search queries. In late October, Google launched AI Overviews in 100 countries
The AI Overviews system uses Google’s in-house Gemini AI model. Advertisers utilizing Gemini AI tools see increased traffic and click-through rates, especially among younger demographics, Google says.
GOOGL Stock: Waymo Expands
Meanwhile, Waymo on Dec. 5 announced that the company plans to expand its autonomous vehicle rideshare service to Miami in 2026. The Waymo One robotaxi service currently operates in Phoenix, San Francisco, and Los Angeles, with upcoming service already planned for Austin, Tex. and Atlanta. In Miami, Waymo will compete with Uber Technologies (UBER) and other rideshare services. In Austin and Atlanta, Waymo is partnering with Uber.
Meanwhile, Waymo also disclosed that it has reached 150,000 trips per week, rapid growth from August levels at 100,00 per week. Waymo is widely viewed as the leader in autonomous vehicles. In October, Waymo closed a $5.6 billion funding round, including Google and previous investors. If Wall Street analysts start including Waymo in Alphabet’s valuation, it would be a big development.
↑
X
AI Stocks Are Getting Tired. Is The Dot-Com Bubble A Blueprint Or A Cautionary Tale For Investors?
However, legal woes continue amid DoJ antitrust cases. Both Google’s internet search and advertising businesses are under DoJ scrutiny.
Google Stock: YouTube, TikTok
Also, analysts say GOOGL stock is getting a boost from the Performance Max advertising platform. It automates buying across YouTube, internet search, display, Gmail, maps and other applications. Performance Max lets advertisers manage campaigns across all Google ad inventory.
Aside from Google’s core internet search advertising business, Wall Street analysts view growth at YouTube and cloud computing as key. Another question is the performance of Google’s hardware business, where it’s battling Apple in smartphones.
Google aims to slow down the growth of TikTok with its own short video platform. How much money Google generates from YouTube Shorts is a key issue for 2024, analysts say. YouTube Shorts now generates roughly 70 billion daily views.
In cloud computing, Google is still the third biggest service provider, behind Amazon.com (AMZN) and Microsoft. Like Amazon Web Services and Microsoft’ Azure business, Google’s cloud unit has upped capital spending targeting the new opportunity in generative AI.
Google’s 2022 acquisition of cybersecurity firm Mandiant for $5.4 billion seems to be paying dividends. Mandiant is part of Google’s cloud-based cybersecurity services.
GOOGL Stock: Is It A Buy Or Sell Now?
Alphabet stock has turned in good and bad years recently. Shares jumped 65% in 2021 but in 2022 dropped 39%. Despite mounting competition in AI and internet search, Alphabet advanced 58% in 2023.
Also, the Relative Strength Rating of Google stock currently stands at 86 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
Google stock holds an Accumulation/Distribution Rating of B-plus. That institutional ownership rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Further, shares hold an IBD Composite Rating of 97 out of a best possible 99. The best growth stocks have a Composite Rating of 90 or better.
On MarketSurge, GOOGL stock holds an entry point of 182.49 and trades just above a 5% buy zone. Investors should be cautious amid end-of-year market volatility. And, long-time holders could take profits.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
YOU MAY ALSO LIKE:
Want To Trade Options? Here Are The Basics To Get You Started
Monitor IBD’s “Breaking Out Today” List For Companies Hitting New Buy Points
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
Stock Market Exposure Level: How Invested Should You Be Right Now?
