Ahead of Alphabet’s (NASDAQ:GOOGL) Q1 report, there were concerns the tech giant’s business was going through a bit of a wobble as its positioning in the AI game appeared to be lacking when compared to some of its rivals.
Well, those worries appeared to be overblown. The company delivered a strong readout, offering beats on both the top-and bottom-line, and showing clear evidence the business is actually in rude health.
And so is the share price, which has been rallying and currently sits just a touch below the all-time highs.
For those wondering if now is still a good time to be loading up on GOOGL shares, for investor Juxtaposed Ideas, the answer is a simple yes.
“Combined with the promising prospects in its search engine/ generative AI capabilities, robust profitability, and rich balance sheet, we believe that GOOG remains well capitalized to deliver profitable growth and robust shareholder returns ahead,” the investor said.
Sentiment has shifted positive again for GOOGL and it’s no wonder, says Juxtaposed, given the growth profile and prospect of more to come. In Q1, Google Search & other revenue rose by 14% year-over-year to $46.15 billion as the search engine still completely dominates the market, boasting a global share of 90.91% as of April.
That growth, however, was put in the shade by that seen in its YouTube ads business. Previously an “area of concern,” here revenue climbed by 21% to $8.09 billion. Add in the momentum witnessed in the Cloud segment, which showed revenue growth of 28% and operating income that more than quadrupled compared to the same period last year, and you can see why the investor is impressed.
However, the company’s strong performance is not solely reserved for the top-line. With improved cost efficiencies, Juxtaposed believes it is unsurprising the company has been delivering “expanding operating margins.”
“Most importantly,” the investor goes on to say, “with GOOGL expected to generate robust Free Cash Flow through FY2026, we believe that its balance sheet may continue to grow, along with shareholder returns and opportunistic acquisitions.”
As such, Juxtaposed Ideas maintained a Strong Buy rating on GOOGL shares. (To watch Juxtaposed Ideas’ track record, click here)
Most Wall Street analysts agree with that thesis. Based on a mix of 31 Buys vs. 5 Holds, GOOGL stock claims a Strong Buy consensus rating. Going by the $194.83 average target, a year from now, shares will be changing hands for a ~15% premium. (See Alphabet stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.