GOOGL - Google: Valuation Makes No Sense

2024-07-24 06:32:45 ET

Summary

• Alphabet beat earnings estimates for Q2 due to digital advertising and Cloud strength.
• Google's resilient core business performance included 29% growth in the Cloud segment, which generated over $10B in quarterly revenues for the first time.
• Google's P/E ratio of 21X seems woefully inadequate given the firm's strong growth in its digital advertising and Cloud segments.
• Google also has surprise potential in terms of pursuing new acquisitions in the Cloud/AI/cybersecurity sector after WIZ deal fell through.

Alphabet ( GOOG ) (GOOGL) outpaced earnings estimates for the second fiscal quarter on Tuesday due to continual momentum in the digital advertising business as well as Cloud... which for the first time ever in the history of Google surged past $10B in quarterly revenues. The market has not reacted very positively to the company's second-quarter results, as shares dipped 2% in the after-hours market. Free cash flow strength, Cloud/AI momentum and stock buybacks are the top three reasons why I see a pathway for Google to revalue higher going forward. The Q2 post-earnings dip, should it get more severe in the next several days, would constitute a new engagement opportunity for investors!...

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