On Wall Street, Alphabet (Google) is grappling with an uninspiring outlook. Will stocks be able to catch up? We have identified some positive clues.
Google, could the stock market crash be an opportunity? Fears surrounding investments in artificial intelligence (AI) are lowering near-term profit prospects, negatively impacting market sentiment. However, the strong financial position and diversification of Google’s business are positive factors that cannot be ignored.
After the financial results shared by the company, what do Wall Street analysts and experts expect? Let’s delve into the data and future prospects to understand if this collapse can turn into an opportunity for investors.
Google shares in free fall, what is happening?
The rally in Alphabet, Inc, aka Google, stocks came to an abrupt end just after the company released its latest quarterly earnings.
Google reported a increase in revenue of 15% year over year, with an improvement in operating margin of up to 32%. These results were primarily driven by Google Search and Google Cloud, which showed solid and continued growth. However, despite the positive financial results, the share price declined. The main reason for this decline appears to be linked to the outlook provided by the administration for the coming quarters.
Investors are concerned about the impact of the high levels of investment Google is making in technical infrastructure and AI development. These investments, while crucial to maintaining long-term competitiveness, could begin to erode operating margins as early as the third quarter. The market, anticipating these potential negative effects, discounted the less rosy prospects provided by the company on the share price.
- GOOGL 1W graph
- Source: baha.com
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AI could cause a Wall Street crash soon
The “Motorola Moment” and doubts about the future
As investment in AI intensifies, significant doubts have emerged about Google’s ability to take full advantage of these technologies compared to specialized competitors. Some analysts are already talking about a possible “Motorola Moment,” a reference to the period in which Motorola, despite its large investments and innovations, failed to maintain market leadership.
Google is investing heavily in AI, but it remains to be seen whether it can benefit more than more agile competitors focused on specific segments of the AI market.
What are Google’s strengths?
Despite the doubts, Google has a powerful weapon that many of its competitors do not: a robust financial position. With over €100 billion in liquidity and a record market capitalization, it allows it to climb the AI mountain simply by implementing the right extraordinary finance operations.
Google’s business diversification is another factor in its favor. In addition to significant earnings from Google Search and Google Cloud, the company has several lines of business with positive growth potential. These segments can provide stability and support long-term investments in AI, even if they require more time and resources than expected.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since only he knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.| Original article published on Money.it Italy 2024-07-30 16:30:00. Original title: Google, il crollo in borsa può essere un’occasione?
