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Can FAANG Stock Continue its Run? By TipRanks

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© Reuters. Alphabet: Is FAANG Stock on the Rise?

Alphabet (NASDAQ 🙂 is leading the FAANG stock basket higher lately.

Alphabet (NASDAQ:) continues to be a strong stock and impresses the Street. GOOGL shares, which are currently valued at 30.4 times trailing earnings (a historic valuation perspective), do not seem to be overpriced.

Alphabet shares may be an relative bargain compared to other unprofitable tech companies, even though the wider market is showing signs of weakness. (See GOOGL stock charts on TipRanks)

Alphabet Continues Firing on all Cylinders

Alphabet has left COVID-19 pressures behind, with the 2020 advertising slowdown now in the rearview mirror. Alphabet saw a remarkable 62% increase in its top-line and an astounding 169.1% in EPS for the second quarter. This is a remarkable growth rate for an organization with a market capital of close to $2 trillion.

Alphabet has had a stellar quarter despite the fact that year-overyear comparators have been very favorable. However, Alphabet has demonstrated that it is able to keep growing despite being older.

This isn’t a dominant online advertisement business. With its unparalleled data wealth, the company has made great strides in cloud computing and is now arguably the leader in artificial intelligence (AI).

Alphabet’s Waymo autonomous car venture or Stadia its cloud gaming service, are also worthy of attention.

They have not been a significant contributor to Alphabet’s phenomenal growth but could be a catalyst for something great over the coming decade.

Alphabet’s Other Bets

Indeed, ever since Google became Alphabet, it’s become more than just a search company, though search and online ads continue to comprise a vast majority of the firm’s revenues.

It’s difficult to know which Alphabet’s next ventures will be successful, but investors can get such businesses for a substantial discount at these valuations. It is rare that other businesses can invest such large sums in innovative ventures.

Alphabet’s cloud-gaming platform Google Stadia is met with mixed results. It effectively reduces barriers for entry to console gaming. The technology itself is impressive but the games are not up to par.

The company had previously said that its platform would not be able to develop first-party game. Many saw this as an indication that Stadia’s future looked uncertain. Stadia’s decision to pivot is not a sign of the end for first-party gaming.

Due to the current semi-shortage, it is difficult for next-generation consoles to be made. Google may be able take Stadia up a notch if they can secure the services of major publishers. Microsoft (NASDAQ:) has been the envy for the technology industry with its gaming efforts. Google seems to be at crossroads. Stadia looks likely to close with its CEO now moving on for Google Cloud.

It doesn’t matter if we are talking about Google Plus, or Google Glass. But it is clear that many of Alphabets’ side projects don’t add up to anything.

Some side projects make poor use of cash. However, you should not rule out the possibility of future dividend-paying innovations. Alphabet’s ability to invest in such ventures has been demonstrated, despite recent setbacks at Waymo and Stadia.

Google’s Ad Business is expected to be the leader, with FAANG much more.

Wall Street’s Take

According to TipRanks’ consensus analyst rating, GOOGL stock comes in as a Strong Buy. The 29 analyst ratings include 28 Buys and one Hold.

The average GOOGL price target is $3,198.86. Price targets for analysts can range between $3,000 to $3,600 per shares.

Disclosure: Joey Frenette does not own shares in any of the companies mentioned at time of publication.

Disclaimer: This article is solely the author’s opinion and does not reflect the opinions of TipRanks and its affiliates. It should only be used for informational purposes. TipRanks does not warrant the accuracy, reliability or completeness of this information. The article does not constitute a solicitation or recommendation to buy or sell securities. This article is not intended to provide advice on legal, investment or financial matters. TipRanks or its affiliates are not responsible for the contents of this article. Any action you take based on the information is your responsibility. TipRanks and its affiliates do not endorse or recommend this link. Performance in the past is no guarantee of future performance, price or results.

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