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Alphabet (GOOGL) has drawn investor attention after recent share price moves, with the stock showing mixed short term performance and relatively stronger gains over the past month and the past 3 months.
See our latest analysis for Alphabet.
Alphabet’s recent pullback over the last week sits against a much stronger backdrop, with a 30 day share price return of 7.44% and a 90 day share price return of 31.76%, while the 1 year total shareholder return of 69.03% and 5 year total shareholder return of 251.05% point to strong long term wealth creation despite short term volatility.
If Alphabet has you thinking about where the next big opportunity might be, this could be a good moment to look at high growth tech and AI stocks as potential ideas for your watchlist.
With Alphabet trading at $330 and only a small discount to analyst price targets, recent revenue and net income growth in the low teens raises a key question: Is there still a buying opportunity here, or is the market already pricing in future growth?
According to oscargarcia, the narrative fair value for Alphabet sits at US$340, slightly above the last close of US$330, which raises a clear question about how much long term earnings power is being baked into that gap.
Alphabet is the undisputed heavyweight champion of digital advertising, responsible for nearly 30% of global ad spend. Google Search: Still the most profitable query box in human history.
Want to see what kind of revenue growth, profit margins, and future P/E multiple are backing that US$340 fair value? The narrative leans heavily on high margin ad cash flows, AI monetisation, and a premium earnings multiple usually reserved for market leaders.
Result: Fair Value of $340 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, regulatory action on search and ads, or faster than expected shifts toward rival AI platforms, could quickly challenge the optimistic Buffett-style valuation story.
Find out about the key risks to this Alphabet narrative.
While the user narrative points to a fair value of US$340 and a 2.9% undervaluation, our DCF model lands in a different place. It puts fair value at US$312.44, with Alphabet at US$330 looking overvalued instead. Which story do you think better fits the risks and growth assumptions?
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Alphabet for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 868 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.
If you are not fully on board with these views, or you prefer to pull apart the numbers yourself, you can build your own take in just a few minutes with Do it your way.
A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Alphabet.
If Alphabet is already on your radar, do not stop there. Use the Simply Wall St Screener to spot other opportunities that might deserve a place on your watchlist.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include GOOGL.
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