From Nasdaq:

The “Magnificent Seven” technology companies, including Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla, drove a 66% surge in the Nasdaq-100 Technology Sector index in 2023. Alphabet’s stock jumped 61% during the year, fueled by its improving financial performance driven by gains in advertising and cloud businesses. Revenue improved each quarter, reaching $76.7 billion in the third quarter of 2023.

Analysts expect Alphabet to finish 2023 with $306 billion in revenue, an 8% increase over 2022. The company’s growth rate is projected to accelerate in 2024 and 2025, driven by the growing adoption of AI. Alphabet has positioned itself to capitalize on AI adoption in the digital ad market, and its Google Cloud business is also gaining a boost from AI.

Alphabet’s Google Cloud revenue increased 22% year over year in the third quarter to $8.4 billion The company is offering multiple AI products in the cloud, allowing customers to build generative AI applications, gain insights from unstructured data, and train machine learning models. The growing AI-fueled cloud market is expected to reach $887 billion in 2032 as compared to $43 billion last year.

Analysts forecast Alphabet’s earnings to grow 26% to $5.77 per share in 2024. With a five-year average price-to-earnings (P/E) ratio of 27.4, analysts point towards a stock price of $183 in 2024, indicating a jump of 28% from current levels. Alphabet is the cheapest of the “Magnificent Seven” group, offering a good deal for investors.

Stock Advisor analyst team identified 10 best stocks, and Alphabet wasn’t one of them. However, it has emerged as an enticing investment option with strong growth potential driven by its AI-fueled growth. The company is set for robust bottom-line growth in 2025 as well, indicating long-term upside potential.

The previously mentioned technology companies are likely to produce good returns for investors. Alphabet stock could deliver even stronger gains in 2024 if the market rewards it with higher earnings multiple thanks to its AI-fueled growth. The bottom-line growth is set to remain robust in 2025 and beyond, making Alphabet an attractive investment.



Read more: This “Magnificent Seven” Stock Could Win Big From Artificial Intelligence (AI) in 2024, and Beyond