How to Trade Alphabet on AI Growth Potential
The year 2023 will surely be remembered as the year of AI (Artificial Intelligence). After OpenAI unveiled ChatGPT towards the end of 2022, it sparked excitement about the possibilities of the industry and triggered something of an arms race amongst the world’s top technology companies.
Amongst the tech stocks seemingly well-positioned to benefit from this growing industry is Google parent company, Alphabet. And that’s not its only opportunity for growth in the future. Keep reading to learn more about Alphabet and what analysts are predicting for the stock in 2024.
|Alphabet Inc. (Google, Class A)
|Symbol for Invest.MT5 Account:
|Date of Idea:
|19 December 2023
|6 - 12 months
|Position Size for Invest.MT5 Account:
- The Invest.MT5 account allows you to buy stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose, as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Why Trade Alphabet?
At the end of October, Alphabet released their third quarter earnings report. Whilst revenue and earnings grew strongly and beat analyst expectations, one segment fell short of expectations, which disappointed investors. Below are some of the highlights from the Q3 report:
- Revenue of $76.69 billion compared with an expected $75.98 billion – and an increase of 11.0% year on year (YoY).
- Earnings per Share (EPS) of $1.55 vs an expected $1.45 – and an increase of 46.2% YoY.
- Operating income grew 24.6% from $17.14 billion to $21.34 billion.
- Advertising revenue grew 9.5% from $54.48 billion to $59.65 billion.
- Google Cloud revenue grew 20.9% from $6.90 billion to $8.34 billion, but missed expectations.
It is Google Cloud which disappointed investors, with revenue falling short of expectations by more than $20 million. In the flourishing cloud computing market, Google Cloud’s 11% market share falls significantly short of Amazon Web Services (32%) and Microsoft Azure (22%).
Nevertheless, although investors may have been disappointed that cloud revenue did not meet expectations, it continued to grow strongly year on year. Moreover, after a string of losses, the segment has recorded three consecutive profitable quarters.
It is important to remember that the cloud market is still relatively young, it is growing quickly and, although it may lag behind its rivals, an 11% market share is certainly not insignificant. If we take AWS as an example, it shows that Google Cloud has the potential to be a considerably high margin operation in the years ahead.
But it’s AI which has been stealing all the headlines this year and which has grabbed the attention of investors and big tech companies alike. So, what do Alphabet’s prospect in this field look like?
When OpenAI unveiled ChatGPT in November 2022, its unexpected success compelled other tech companies to scramble to release their own AI offerings in response. A few months after the launch of ChatGPT, Google announced its own AI chatbot, Bard.
The launch wasn’t a screaming success, with the chatbot making a factual error in its very first presentation. However, Alphabet plans to launch a new large language model in 2024 named Gemini.
Alphabet’s wide range of products positions it well to benefit from advances in AI technology. Google Search, YouTube, Google Cloud and Android, and their respective users, all stand to potentially benefit from Alphabet’s heavy investment in AI. Nevertheless, competition in the industry is already fierce, with other tech giants such as Microsoft and Amazon also scaling up investment in their own AI offerings.
Alphabet shares are already up more than 50% in 2023. So, where do the analysts expect share price to go from here?
Alphabet Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for an Alphabet stock forecast in the past 3 months, there are currently 26 buy, 6 hold and 0 sell ratings on the stock. The highest price for an Alphabet stock forecast is $180.00 with the lowest price target at $129.00.
The average price target for a Alphabet stock forecast is $153.57.
An Example Trading Idea for the Alphabet Stock Price
An example trading idea for the Alphabet share price could be as follows:
- Buy the stock on a break above $140.00 to allow for volatility.
- Target just below the highest analyst price target of $153.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 6 - 12 months
- If you buy 20 Alphabet shares:
- If target is reached = $260.00 potential profit [($153.00 - $140.00) * 20 shares].
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises. Be sure to exercise good risk management and always know how much you could potentially lose on a trade, as well as the costs involved.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 20 shares in Alphabet would result in a commission of $0.20 ($0.02 * 20 shares) for executing a per-side transaction.
However, there is a minimum transaction fee of $1. So, buying 20 Alphabet shares would result in a commission of just $1 overall!
How to Buy Alphabet Stock in 4 Steps
With Admirals, you can buy shares in more than 4,500 companies, including Alphabet, with a commission of just $0.02 per share and a minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the dashboard.
- Click ‘Invest’ on your live or demo account to open the web platform.
- Search for Alphabet shares in the search and click the symbol to open a price chart
- Click ‘Create New Order’, enter the number of shares you wish to purchase and hit ‘Buy’ to send your order to the market.
Click on the banner below to trade Alphabet stock today! ▼▼▼
Do You See the Alphabet Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Alphabet’s share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
The Trade.MT5 and Trade.MT4 accounts allow you to speculate on the price direction of stocks and shares using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices.
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