Google and YouTube parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is a strong competitor in the field of artificial intelligence (AI) technology. Furthermore, Alphabet’s revenue growth should impress investors. Yet, short-term traders recently dumped their Alphabet shares. That’s not a problem, though. My bullish GOOG stock forecast indicates that any drawdown is just an opportunity to start buying.
There no denying that Alphabet is committed to developing the latest and greatest in AI tech. The company is busy adding AI-enhanced features to its Bard chatbot as well as Google Maps.
So, why did the market suddenly turn against Alphabet? Let’s dig into the data now and see if there’s a “magnificent” (as in, “Magnificent Seven”) bargain available with Alphabet stock.
GOOG Stock Tumbles Despite Revenue Growth
Apparently, double-digit revenue growth isn’t good enough for the market anymore. Maybe investors expect too much of a “Mag-Seven” company and AI powerhouse like Alphabet.
Here’s what happened. Alphabet stock dropped quickly after the company released its financial results for 2024’s fourth quarter and the full year. As it turned out, Q4 2024 marked Alphabet’s third quarter in a row in which the company’s revenue growth escalated.
Specifically, Alphabet’s revenue increased 13% year over year (YOY) to $86.3 billion, beating Wall Street’s call for $85.3 billion. So far, so good.
Particularly strong was Google Cloud revenue, which grew 26% YOY to $9.2 billion. This result also surpassed the analysts’ consensus estimate of $8.9 billion.
Apparently, here’s why the market was disappointed. Alphabet’s core search business revenue of $48 billion missed the analysts’ consensus call for $48.15 billion. That’s a narrow miss, you must admit. Nevertheless, investors decided to divest their Alphabet shares.
Analyst Discovers a Bargain
Evidently, some analysts aren’t losing sleep over Alphabet’s slight core search business sales miss. Indeed, Citigroup analyst Ronald Josey seems quite optimistic, expecting that “GenAI tools across Search and Ads should be tailwinds to growth” for Alphabet.
I already mentioned Alphabet’s commitment to advancing AI technology. On that topic, Josey and the other Citigroup analysts will “be watching whether newer GenAI ad tools improve Google’s Search revenue trajectory.”
Like Josey, Guggenheim Securities analyst Michael Morris doesn’t seem too worried about Alphabet’s future prospects. Morris believes that Alphabet’s valuation on forward earnings is “a discount to ‘Mag 7’ peers, a bargain in our opinion given multiple consumer and enterprise growth opportunities for the business.”
I tend to concur with Morris’s assessment. I also agree with Truist Securities analyst Youssef Squali, who asserts that Alphabet “remains at the forefront of the AI race.” All three of the analysts mentioned here assigned a “buy” rating to GOOG/GOOGL stock.
GOOG Stock Forecast: Seize the Opportunity
Alphabet barely missed Wall Street’s sales prediction, and that was just in one business division. Meanwhile, Alphabet demonstrated excellent revenue growth in the company’s Google Cloud unit.
Really, if Alphabet’s valuation dropped due to the market’s irrational reaction, that’s just a buying opportunity for you. Therefore, my forecast GOOG stock is 100% bullish and I encourage investors to grab some shares before the next long-term rally commences.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.