Google-parent Alphabet is one of the few major tech stocks that has sidestepped the sector's sell-off in the new year. That is one reason why Google stock is Thursday's selection for IBD 50 Stocks To Watch.
Google is among the so-called "Magnificent Seven" stocks and boasts a gain of 58% in 2023 despite an earnings breakdown in October. IBD MarketSmith shows the company's shares are near a buy point of 139.42 in a cup with handle.
It's primarily due to two reasons.
In December, shares rose as the search giant stepped up its efforts to integrate artificial intelligence and automation in its digital ads business.
Also in December, parent company Alphabet launched its newest and most advanced artificial intelligence product, Gemini. The program is trained to understand text, image and audio.
Google Stock: Third-Quarter Results
Sales growth for Google over the past seven quarters has ranged between 1% and 23%. The company started posting earnings growth again in the two most recent quarters after a series of declines.
In the third quarter ended Sept. 30, sales grew 11% to $76.7 billion while earnings per share of $1.56 jumped 42%.
Revenue from both Google Services and Google Cloud contributed most to the sales growth. Google Services includes Search, Google Play, Google Ads, YouTube and other products and services. Google Cloud provides software and collaboration tools for businesses.
But there was one caveat that accompanied the results: cloud computing revenue came in at $8.41 billion and missed views of $8.64 billion. That prompted Google stock to gap down, as investors feared the company was losing market share to tech titans Microsoft and Amazon in cloud services.
Higher Ratings For Shares
The stock since has climbed back and formed its current base, with the support of sound technical ratings. Investor's Business Daily gives Google stock a Composite Rating of 96 while its EPS Rating is 97 out of a best-possible 99.
Google's Relative Strength Rating at 85 is up sharply from 21 a year ago. And GOOGL stock ranks third in IBD's Internet Content group.
Mutual funds own 42% of outstanding shares of the company, and more funds have come in as net buyers of the stock over the past seven quarters. The MFS Growth Fund (MFEGX) and the AllSpring Growth Fund (SGRAX) are among those holding shares of GOOGL.
Among exchange traded funds, the iShares Global Communications Services ETF and State Street's Communication Services Select Sector SPDR Fund hold shares of Google stock.
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