Is Alphabet Still My Top Stock to Buy Now? | GOOG Stock Analysis

Summary

In this video, the host reviews Alphabet's recent quarterly financial results, highlighting a 15% year-over-year revenue increase and a notable rise in operating profit margins. The CEO's emphasis on the success of AI investments in the cloud segment reassured investors. With Alphabet's stock showing strong performance, the host reiterates it as a top buy for 2024, citing undervaluation based on discounted cash flow analysis. The video also discusses the disciplined management of employee count and capital deployment into profitable growth areas, which bode well for Alphabet and its relationship with key partners like NVIDIA.

Takeaways

• 😀 Alphabet's stock rose by up to 4% following the release of its quarterly financial results on October 29, 2024.
• 📈 The company reported a 15% year-over-year revenue increase, reaching $88.27 billion.
• 💡 The growth was significantly driven by advancements in its AI capabilities within the cloud segment.
• 📊 Alphabet's operating profit margin improved from 27.8% to 32.3%, leading to a $28.5 billion operating income.
• 🏢 The employee count remained stable, reflecting disciplined hiring practices after previous layoffs.
• 💰 Alphabet is actively deploying its cash reserves into AI-optimized data centers, reducing its cash balance from $11.9 billion to $9.3 billion.
• 🚀 The CEO highlighted strong momentum in AI-related business, attracting new customers and securing larger deals.
• 🔍 The stock is viewed as undervalued, with a forward P/E ratio of 19.45 and an intrinsic value estimated at $238 per share.
• 📉 Investors were pleased with the increased profitability and efficient capital deployment by Alphabet.
• ✅ The analyst maintains Alphabet as a top stock recommendation for 2024, citing its growth potential in the AI sector.

Q & A

What recent financial results did Alphabet report?

Alphabet reported a 15% year-over-year revenue increase, totaling $88.27 billion for the quarter ending September 30, 2024.

How did Alphabet's operating profit margin change in the recent quarter?

The operating profit margin improved from 27.8% to 32.3%, resulting in an operating income of $28.5 billion.

What was a major focus for investors regarding Alphabet's performance?

Investors were particularly interested in the development of Alphabet's artificial intelligence business and its ability to generate revenue from these investments.

How has Alphabet's employee count changed, and why is this significant?

Alphabet has maintained a lower headcount compared to the previous year, which enhances revenue and profit per employee, reflecting more disciplined management.

What trend was observed regarding Alphabet's cash reserves?

Alphabet's cash reserves decreased from $11.9 billion to $9.3 billion as the company invested in property and equipment, particularly for AI data centers.

What insights did the CEO provide about the company's momentum?

The CEO highlighted that the momentum across the company is extraordinary, driven by innovation and the long-term focus on AI investments that are benefiting consumers and partners.

How does Alphabet's current stock valuation compare to its intrinsic value?

Alphabet's stock is trading at a forward P/E ratio of 19.45, while the estimated intrinsic value is $238 per share, indicating that the stock is currently undervalued.

What impact does Alphabet's AI investment have on its business?

The AI investments are driving deeper product adoption, attracting new customers, and winning larger deals, which contributes to overall revenue growth.

How did Alphabet's stock perform immediately after the earnings release?

Following the earnings release, Alphabet's stock price jumped by about 4%, rising from approximately $170 to closer to $180 per share.

What is the speaker's overall recommendation regarding Alphabet's stock?

The speaker has reaffirmed Alphabet as their top-rated stock to buy in 2024, citing strong financial performance and positive growth prospects.