Google stock has joined the IBD 50 list and as a result is Wednesday's pick for IBD 50 Stocks To Watch. After reaching a new high, shares now sit in a buy zone as parent company Alphabet has unveiled a new artificial intelligence chip.
Google is bringing chip development in-house to reduce the need for outside chip vendors and save costs. It has been using Broadcom semiconductors in its data center and cloud services as well as chips from specialty chipmaker and AI leader Nvidia.
Now, Alphabet is making several key announcements regarding plans for doing its own chipmaking at its three-day Google Cloud Next conference in Las Vegas, which concludes Thursday. As a result, the company plans to compete with Nvidia instead of being one of its customers.
The company's biggest announcement is the unveiling of its new artificial intelligence chip name Google Axion. This type of semiconductor is normally used by computer servers in high-performance internet data centers.
On Tuesday, Alphabet said its new AI chip uses Arm Holdings technology. Its uses will range from YouTube advertising to data analysis. The AI chip should be available in late 2024 to cloud customers.
Google also showcased its new AI processor using Nvidia's H100 technology. In addition, it announced its new artificial intelligence-based video creation tool called Google Vids. The technology will be used to write, produce and edit marketing and advertising videos.
The news cluster prompted BMO Capital to raise its price target to 185 and from 175 on Google Wednesday. BMO held its outperform rating on the AI stock.
Google Stock Ripe For The Picking In Buy Zone
Google stock has reached a 153.78 buy point out of an undefined base and is the 5% buy zone reaching to 161.47 according to MarketSurge pattern recognition. Further, the AI stock hit a record high of 158.56 on Tuesday.
Shares also traded tightly and formed a bullish three-weeks-tight pattern with a 155.74 entry. Three-weeks-tight patterns are best used to add to an existing position.
On Jan. 30, Alphabet reported fourth-quarter earnings and revenue that topped analyst estimates but said its advertising revenue slightly missed views. Shares tumbled 7.5% the next day in heavy volume and started forming a new base. Google stock reversed in early March and steadily climbed to a new high.
The Magnificent Seven stock found support at its 21-day exponential moving average. Google stock holds an EPS Rating of 98 and a Composite Rating of 95 from Investor's Business Daily.
Profits Continue To Grow
Analysts expect Google's first-quarter earnings to grow 31%, though they see profit growth slowing in the following two quarters. Meanwhile, Wall Street sees sales growth ranging from 10% to 13% for the upcoming four quarters.
Google stock analysts project full-year 2024 earnings to grow 20% then 15%, according to MarketSurge.
Also, Alphabet plans to report first-quarter results around April 23.
Mutual funds have added shares of Alphabet stock. Google stock holds a 1.4 up/down volume ratio, indicating positive demand for the stock.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
