The big day is coming! Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) is set to report its third-quarter 2023 results on October 24, and I’m ready for an earnings winner. I am bullish on GOOGL stock, even though it has already rallied this year, as Alphabet is a search engine market dominator and an ambitious contender in the generative AI arms race.
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Alphabet is an American search engine, tech gadget, and cloud computing pioneer that owns Google and YouTube. Plus, the company is known for developing smart vehicles and glasses with amazing features.
Furthermore, as we’ll discover in a moment, Alphabet is heavily favored by Wall Street’s premier experts. This gives me confidence that GOOGL stock (and its sister stock, GOOG) can continue to head higher in Q4, even after it already rallied throughout the year.
Alphabet Earnings Day: Mark Your Calendar
You can like the company or hate it, but there’s no denying that Alphabet’s quarterly earnings reports are huge events on Wall Street. After all, GOOGL stock is known as a “Magnificent Seven” stock for a good reason. Alphabet is a technology industry giant, and if the company beats expectations and provides positive forward guidance, this sets an optimistic tone for the entire tech sector.
Alphabet already surpassed consensus EPS estimates in 2023’s first and second quarters. Could the company serve up another set of outstanding results on October 24? It’s entirely possible, as analysts are calling for Alphabet to have earned $1.45 per share in the third quarter, which is just a penny higher than the company’s second-quarter EPS result.
Remember, even if Alphabet’s forays into smart cars and fancy glasses don’t pan out, the company will still generate monstrous revenue due to its search engine dominance. In fact, one economic expert with the U.S. Department of Justice estimates that Google’s exclusive deals account for half of all searches on internet-connected devices in the U.S.
So basically, Alphabet has the U.S. search engine market cornered, and for now, it’s a legal monopoly/oligopoly. At some point, Alphabet might be targeted for an antitrust investigation. For the time being, though, I’m betting on Alphabet, a market dominator and a likely earnings crusher.
Alphabet Plays Hardball in the Generative AI Arms Race
You can also count on GOOGL stock if you’re seeking immediate exposure to generative AI technology. Alphabet is constantly upping the ante and threatening its competitors with gen-AI enhancement and innovations.
For example, Google recently updated its Search Generative Experience (SGE) with new features. SGE is Google’s generative-AI-powered conversational search feature. With the new update, users can try out enhanced image generation and draft-writing composition features.
At the same time, Alphabet is taking steps to make its gen-AI features safer. In particular, TechCrunch reports that Google is “limiting its new image generation feature to users 18 and older.” I think that’s a smart move, as Alphabet should set an example of how gen-AI can be deployed responsibly. If Google earns parents’ trust, it’s a win-win for everyone involved.
Finally, YouTube, which is powered by Google AI, now offers a “Spotlight Moments” package for advertisers. This uses AI to help advertisers identify the popular YouTube videos pertaining to certain cultural moments (the Academy Awards, Halloween, the Super Bowl, etc.). This could be a smart way for advertisers to leverage the power of AI to make YouTube ads more efficient and effective.
Is GOOGL Stock a Buy, According to Analysts?
On TipRanks, GOOGL comes in as a Strong Buy based on 30 Buys and four Hold ratings assigned by analysts in the past three months. The average Alphabet stock price target is $151.06, implying 8.1% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell GOOGL stock, the most accurate analyst covering the stock (on a one-year timeframe) is Doug Anmuth of JPMorgan Chase (NYSE:JPM), with an average return of 23.84% per rating and an 87% success rate. Click on the image below to learn more.
Conclusion: Should You Consider GOOGL Stock?
Clearly, Alphabet isn’t joking around when it comes to AI technology. The company is playing hardball, and its competitors might have trouble keeping up. Moreover, Google is still the undisputed heavyweight champion of U.S. search engines.
Best of all, on October 24, Alphabet has a chance to show how much its top- and bottom-line results have improved in the third quarter. So, don’t be too concerned that GOOGL stock has already rallied in 2023, as I feel it’s an analyst-favored stock that investors should still consider.
