Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Alphabet: Can FAANG Stock Continue its Run?

Stock MarketsSep 24, 2021 07:00PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Alphabet: Can FAANG Stock Continue its Run?

Alphabet (NASDAQ:GOOGL) has been leading the basket of FAANG stocks higher of late.

I am bullish on Alphabet, as it continues to impress the Street with robust strength across the board. At 30.4 times trailing earnings, shares of GOOGL are not severely overvalued from a historical valuation perspective.

Compared to some of the frothier, unprofitable tech names out there, Alphabet may still be a relative bargain, even as the broader market shows signs of weakness. (See GOOGL stock charts on TipRanks)

Alphabet Continues Firing on all Cylinders

Alphabet has left COVID-19 pressures behind, with the 2020 advertising slowdown now in the rearview mirror. For the second quarter, Alphabet clocked in an incredible 62% in top-line growth, and EPS growth of 169.1%. These are unprecedented growth numbers for a company with a market cap closing in on $2 trillion.

Undoubtedly, Alphabet's stellar quarter has been against highly favourable year-over-year comparables. Still, the company has shown signs that it's able to continue to grow in spite of its age.

It's not just a dominant online advertising business anymore. The company has made significant strides in the cloud and is arguably one of the leaders in AI (artificial intelligence), given its unmatched wealth of data.

Other bets, such as Alphabet's self-driving car endeavor Waymo, or its cloud gaming offering, Stadia, should also not go unnoticed.

Although they haven't been impactful to the company's incredible growth, they could evolve into something special over the course of the next decade.

Alphabet's Other Bets

Indeed, ever since Google became Alphabet, it's become more than just a search company, though search and online ads continue to comprise a vast majority of the firm's revenues.

While it's tough to say which one of Alphabet's next bets will pay off, investors are essentially getting such businesses at a hefty discount at these valuations. Few other firms can funnel in such incredible sums of cash into innovative bets, after all.

Alphabet's cloud-gaming platform, Google Stadia, has been met with mixed success. The video-game console "in the ground" effectively brings down the barriers to entry into console (or computer) gaming. While the technology is quite impressive, the game lineup has been quite lacking.

The company previously announced that it will no longer develop first-party games on its platform. Some took the move as a sign that Stadia's ambitious future was in jeopardy. While first-party games are important to many gamers, I don't think Stadia's pivot marks the beginning of its demise.

With the semi shortage, next-generation consoles are hard to come by. If Stadia were able to win over the business of a big-league publisher, Google could take Stadia to the next level. Indeed, Microsoft (NASDAQ:MSFT) and its gaming push have been the envy of the tech industry. At this juncture, Google is at a crossroads, and it looks like Stadia is a write-off, with its director now gone for Google Cloud.

Whether we're talking about Google Plus or Google Glass, it's clear that many Alphabet's side projects don't amount to much.

Some projects are just poor uses of cash. In any case, it would be unwise to rule out an innovation that could pay dividends in the future. Whether it be Waymo, Stadia -- both of which have had recent setbacks -- or something that's not on our radars, Alphabet has shown that it can still spend on such bets without having a severe negative impact on its stock.

For now, Google's ad business is likely to lead it, and the FAANG cohort, much higher.

Wall Street's Take

According to TipRanks' consensus analyst rating, GOOGL stock comes in as a Strong Buy. Out of 29 analyst ratings, there are 28 Buys, and one Hold.

The average GOOGL price target is $3,198.86. Analyst price targets range from a low of $3,000 per share to a high of $3,600 per share.

Disclosure: Joey Frenette doesn't own shares of any mentioned companies at the time of publication.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Alphabet: Can FAANG Stock Continue its Run?

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email