Alphabet Inc. (NASDAQ:GOOGL) has jumped 8% in about a week amid projections that the firm would beat revenue and earnings consensus estimates in the upcoming fourth-quarter results. The technology giant has exceeded expectations in both metrics in the last four quarters, and there are expectations that the trend will continue.
Looking at the bigger picture, Google had an impressive performance in the past year. The stock registered 44% growth beating S&P 500 index, which rose 18% in the same period. Could the trend continue, or is a slowdown looming?
Ahead of the quarterly financial results, investors are keen to see how the firm will perform in Google services and cloud business units. The segments have led to Alphabet’s revenue growth for the past nine months. Google services grew by about 40% in the third quarter, while the latter jumped by 44% in the same period.
On a less positive note, Google website traffic dropped 16.96% in the fourth quarter of 2021 compared to 2020. YouTube alone saw a drop in visits by about 23.6%, attributed to the fact that people are no longer confined to their homes. The decrease remains a concern that it could largely affect the firm’s ad revenue.
Google Stock trades below the trendline
Source – TradingView
From a technical perspective, GOOGL is trading below the ascending trendline, in a correction. The Relative Strength Index sits at 47, showing some level of indecision as investors wait for the financial report. The daily chart also shows a developing bullish momentum.
Generally, analysts have a positive view of Alphabet. JMP Securities’ Andrew Boone allocated the stock an outperform rating with a $3,300 price target. Evercore ISI analyst Mark Mahaney has an outperform rating and a $3,500 price target.
Summary
If GOOGL meets or surpasses the Wall Street estimates, then the stock is set to rise to reclaim the $3,000 top. Moreover, an expansion in Google services and cloud business revenue will also boost the positive sentiment. However, if the results do not inspire confidence among the investors, then the stock could trade lower.
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